All eyes have been on earnings this week as April winds to a close. The US markets were flat, but the global markets were down a fraction as volatility ebbs and flows out of the market. The correction may still have some legs, but our base case of one being in the context of the greater Bull Market holds. We do not envision the market action turning bearish now. We still have a negative Cash Comparison indicator and wait for the next reading for Long Term Momentum. The Global Stock index is still substantially below Cash, so until we see any improvements, we feel that it is appropriate to park funds in money markets. Once a reversal of rank and further separation takes place, there could be another buy signal developing. We cannot predict when that will be, but the probabilities continue to grow.
The Tactical Indicators remain Neutral. The 10-week stalled out at the 58% level and dropped this week, however not enough to reverse the columns. The Overbought/Oversold Indicator is about 3% below the Bull Trend Average. We continue sideways between the Bull Trend Average and the Oversold levels in a rising, but now, flattening channel. The MSCI All Country World Index is in a wedge pattern on its Point and Figure Chart. With April ending, so too ends the seasonally strong 6-month period as observed historically, and several previous May months have tended to be volatile. We wonder if this price action has been sufficient to set up a significant buying opportunity. There could have been enough corrective action and risk shakeout already. We have also seen headwinds for stocks in US mid-term election years past. Of course, there are no fixed historical precedents that must be followed. One way or another, a resolution is coming.
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