Stocks were up early in the week, faded in the middle, and recovered towards the end. There has been no significant movement from week to week. Both of the Universe Trend Indicators are still in positive uptrends, but you would not glean that the overall market was moving much higher. We have not seen strength or breadth building, which builds evidence that a correction could occur to refresh the markets and allow for better buying opportunities. As mentioned last week, the Long Term Momentum has been positive for the longest period in our recorded history, with increased levels in the MSCI All Country World Index readings each month. Volatility moved up last week and pulled back this week to lower levels, but that will not last indefinitely in our opinion. The continued upward push may not continue, and it would be a healthy sign for a correction to happen in order to wash out risk and refresh the Bull Cycle.
The Tactical Indicators remain in their Neutral zones. The 10-week has held around the 52% level. The markets are making new highs without broader participation among the component stocks, which signifies that the mega-cap stocks might be dragging the indices higher. The MSCI All Country World Index, which had been trending back towards the Bull Trend Average, will need to cross to the 506 level to make new highs. The channel slope is still rising. The longer we go without a correction, the more severe one could potentially be. A 5% correction would move the Index to around the 480 level, and a 10% correction would move it to 455.
We discuss the seasonality in terms of precious metals and miners in terms of tax-loss selling in December and a pattern of rallying into the first quarter of the next year. We also examine the timing of market decisions in the context of risk-reward. For position and performance data, please view the Weekly Update video. If you are not yet signed up to receive the Weekly Update video and would like to receive it for a limited time, then please click on the following link and let us know that you found us through our Blog: Request Weekly Update.