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The S&P 500 finished up 4.3% for the week. This was not enough to get the S&P 500 on highs, but it is a step in the right direction.
What a difference a week makes! Two weeks ago many of the markets were flashing sell triggers and now we have a buy signal coming into this week on the weekly time-frame. We still need the “trigger” to take action…It is the signal…then the trigger which tells you to GO.
Of course, there are different time frames that one can analyze. The weekly is still bullish right now, but the daily is suggesting a choppy week. Basically, the S&P 500 retraced to a common level in which suggests resistance and what do you know…the S&P 500 sold off when it hit it. So, where does that leave us??!!
One can easily see a bull and bear case going into this week depending upon time-frame and strategy. The bottom line is that we have consistently seen higher highs and higher lows indicating an upward trend. We have now seen a lower low and what could be a lower high. This would indicate a change in trend. Not there yet, but we are watching it closely.
Bull / Bear Market
When we look at the long-term trend (monthly) of the S&P 500 and the MSCI All World (ex-USA) index, we see that the bears still have a lot of work to do in order to change the momentum of the equities markets according to the bull/bear market signal. The S&P 500 is still slightly under-performing on a 12-month rolling basis. Again, this is our reason for the focus on international markets at this time.
The swing indexes we like are the following: Canada / United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds
Almost all of the indexes were up sharply just as the S&P 500. This sharp up move has created buy signals throughout many of the markets. The weakest index by far is treasuries. The good news about treasuries is that the longer duration ones are sitting on support from 2017 and as far back as 2015. This doesn’t necessarily mean it will hold, but they are in a place where one could use little risk to get their feet wet. I lean towards this would be a low probability, low risk transaction. I think we have other opportunities that would serve us better. Those opportunities would be Switzerland, Global Water, and Natural Gas.
The markets are closed on Monday dues to Presidents Day. It is a relatively light economic week. The FOMC is scheduled to release their meeting minutes on Wednesday, so we’ll see if that brings any action into the markets.
We are going to add some indexes to our swings if we get the buy triggers. Most of the indexes are pretty far off from any stops or second purchase ranges but we want to pay close attention as the markets can move fast. The bull isn’t dead, but it has been slightly weakened as we have moved from a tight bull channel to a broad bull channel. The next stage would be a trading range. We are expecting a choppy week, but we shall see!
The Education/Gratitude Book Club
This month’s book is “Intentional Thinking: Control Your Thoughts and Produce the Results you Desire,” by Dale East. Yes, I’m still enjoying the book and have gotten into some practical exercises to “control” the subconscious mind. Mr. East states the most important thing to do is live in the present. The first and most important exercise he suggests is to hold a positive thought (the more positive the better) for 15 seconds…and be able to do this on demand. I haven’t gotten much further in the book than this exercise, but he suggests you do this as many times during the day as you can in order to stay present and fight off negativity. Give it a shot?
Adam Straseske, CMT