We continue to move in a sideways pattern in both the US and abroad this week. Markets are not running away to the upside and are not showing more selling pressure either. When we see that the Global Stock Index and Cash are within one ranking of each other in our Asset Class Ranking System, we really cannot be much more neutral. The Cash Comparison is still neutral, and we will have another reading for the Long Term Momentum next week to end May. The seasonality and cyclical concerns that counteract our Confirmed Up signal show us that we do not need to rush back into the markets. This week, we review those factors.
The Tactical Indicators remain Neutral. The 10-week moved up to the 64% level, and while it has not moved enough downward to reverse the columns, it has fallen. The Overbought/Oversold Indicator is around 2.8%-3.0% below the Bull Trend Average, and again this week, the MSCI All Country World Index continues to trade sideways between the Average and the Oversold level. The Oversold level has now reached the critical 500-level of support, both psychologically and financially. A 2.5% drop from the current Index price will get us to that support level. The probabilities are rising for another move down and another leg of a correction to take place. We still believe that any selloffs are not likely to turn into Bear Markets but instead will provide better buying opportunities in the context of a continued Bull Market. Hence, we will look for those spots to deploy capital.
Historically, the second and third quarters in the second year of a US presidential cycle are the weakest, but a strong fourth quarter has often followed. We have also seen nice recoveries when there are market corrections during a US midterm election years. This week, we cover some examples. 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.