Markets sold off fairly sharply in the US and abroad this week in the midst of interest rate expectation and international trade policy changes. Volatility levels have started to rise as the correction may not be over yet, although there could be a sufficient amount of short-term selloff to refresh the Bull market cycle. For the second time during the cycle, the Cash Comparison has moved to neutral. The reversals have held, but there has been no further erosion in the underlying charts for the indicator. They have held their previous levels. The gap between the Global Stock Index and Cash has narrowed. We would look for Cash to rise above the index to set up the potential to trigger a new buy signal, and the further it moves above or the difference between Cash and stocks grows, the stronger a signal we could potentially have. We are hearing much more from the news media about weaker data forecasts and doom scenarios, but we aim to block that out in terms of what we analyze. Overall, we are not ready to take the plunge back into the markets just yet at these levels.
The Tactical Indicators remain Neutral this week. However, the 10-week moved near to the 30% level, so the higher levels really did not hold for very long. We could be heading again to the Low Risk levels if there is another shakeout of risk. If we look at a longer-dated chart, we see an equilibrium of 50% on the global Percent Above 210-days Average chart, which is also a triple bottom. That means about half of stocks are above their 210-day moving averages and half are below them. We could be seeing the start of something more significant. The Overbought/Oversold Indicator has now fallen under the Bull Trend Average. The MSCI All Country World Index is fast approaching the very strong economic and psychological support at the 500 level in the index.
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