The bulls were able to post a winning week with the S&P 500. The index finished up .72% before closing down shop on Friday. They were not able to reverse the entire trading of the prior week, but they did get a start to it.
The bear/bull market reading didn’t change much from last week. Price of both the S&P 500 and All World (ex-USA) Index are outpacing treasuries by a long shot. Until they start to underperform treasuries on a 12-month rolling basis, we are not in a ‘risk off’ stance. The S&P 500 is still underperforming the All World Index which is why we are focused on international markets for the most part.
Breadth picked up with price this past week and increased much more than price. This mismatch of price and the oscillators created a negative reversal according to the close. A negative reversal signals weaker prices ahead. Of course, this could just be the middle of a leg up in price, which would negate the negative reversal. US GDP and Employment numbers are on the docket for this week. GDP numbers are expected to increase while non-farm payroll numbers are expected to soften a little.
Overall, almost all of the positions have a stop prices a relatively good distance from current prices. We did get involved with extended treasuries as we got a buy trigger and the Australian Index didn’t quite make it to trigger a buy, but we still have it on the list for this week if it can break out. The longer-term trend is still up while the shorter-term is down on the S&P 500 as it is still contained in the bear channel.
by Adam Straseske, CMT