To begin the second half of the year, stocks have bounced back from correction lows about 2% in the both the US and abroad. At the end of June, we saw that the Long Term Momentum moved to Negative. However, we do not anticipate that this movement will lead to a bear market because this move reflects more of a sideways price action than downward shift. The Universe Trend Indicator is also Negative, with both the Traditional and Logarithmic chart in descending patterns. This reading means that more stocks globally are showing negative trends on their individual Point and Figure charts. However, the United States-specific charts are showing ascending patterns, so there could be a divergence continuing.
The Tactical Indicators have both returned to Neutral states. The 10-week has moved up from 38% to 46%, meaning that there is some short-term upward momentum. It is difficult to predict from these levels where the next trend will take us. The Overbought/Oversold Indicator has rebounded from the Oversold level to Neutral, but it is still about 4% below the Bull Trend Average. We continue to see the MSCI All Country World Index trading in a sideways pattern. The channel now appears to be flattening, but the Highly Oversold region continues to approach the critical 500-level. That level has held multiple times in 2018. We are now just over 5 months since the highs were put in and the correction began, but there are no time limits as far as corrections go. Should the bull market trend continue or if we have another shakeout of risk, we will be looking for opportunistic risk-reward entry points in the second half of the year.
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