To end February and start March, stocks reversed downward both in the US and abroad about 2.5% after attempting a rally over the past couple weeks. With volatility rising amidst consequential news from the US administration regarding trade policy and Federal Reserve regarding inflation and interest rates, we anticipate wilder market swings and larger ranges potentially in the markets. The Cash Comparison indicator has fallen to Neutral once again. However, we have not seen Cash rise above the Global Stock Index in our rankings, although the gap is closing. Despite the global selloff, we have another positive reading in the Long Term Momentum indicator, continuing the streak to 19 months. With the MSCI All Country World Index dropping, the February reading is not that much higher than that in January. Several key world markets have changed to Neutral, but the global has not. Europe remains uneasy with a key election in Italy this weekend.
The Tactical Indicators are both Neutral this week. The 10-week has moved back down towards the Low Risk zone, with a reading of 30.5% to begin March. We are cautious since the pattern is indeterminate. We could see continuation selling through the low point of 20% achieved last month or Bull confirmation if we can rise above the 42% level. The Overbought/Oversold Indicator has dropped below the Bull Trend Average, and it is moving again towards the 500 support level. We believe the probability is rising for a move downward to the Oversold region along with the lower risk 10-week, which would present the case for further tactical action. The relief rally does not appear sustained.
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