Weak Sell Signal Not Enough to Attract Bears

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The S&P 500 had another bullish week. The index advanced by 2.5%. It seems there is not room for any bears. Certainly those that sold last week are feeling a little pressure right now with the index closing on its’ high for the week. Yes, there was a sell signal last week, but the sell trigger did not go off. The bears had a chance to capitalize, but they could not.

The longer-term momentum on the S&P 500 has advanced back to the upside on the 12-month scale. Of course the month isn’t over, but if it holds where it is, the S&P 500 will certainly be back in positive territory. The All World (ex-USA) index still has some work to do, it is still about 9.5% below the point in which it would signal positive momentum.

When we dig a little bit deeper into the markets, there was quite a broad advance of many different markets for the week.Commodities had a good week, many fixed income markets were up for the week, many international markets were up, and all of the US sectors advanced besides Utilities. Yes, there was a broad advance of many markets, but none of the weekly structure changed too much. In order for the weekly structure to change, the different markets need to surpass the high from the most recent leg down.

The overall look of the S&P 500 is that we are still in a trading range in which we are in the bottom of the top third. I’d have to say it is a little bit riskier as far as the technical picture at the current moment. We’d like to see a pull back with some better risk to reward ratios before re-committing too much. Have a great week!

Warm regards,

Adam Straseske, CMT

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