The losses from last week erased with stocks up both in the US and abroad about 2.5%. Volatility levels have been falling over the past week, although they are still higher today than at the beginning of the year. The media have been touting today the 9-year anniversary of the Bull market, but we are close to the 500-day point of the most recent Bull cycle in our analysis. The Cash Comparison indicator has resumed a Positive reading, making all the Core indicators Positive. 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 is moving back off its lows, and if today’s price action continues, we could see a column reversal. As we discussed last week, it is arduous to predict the next move without a clear pattern forming. A Bull confirmation would occur if we can rise above the 42% level. The Overbought/Oversold Indicator is middling, although the MSCI All Country World Index has risen above the Bull Trend Average, and it shows some upward momentum. The next resistance would be the 528 level established at the end of February, which if passed, could potentially send us back to all-time highs in the MSCI All Country World Index. However, if there is a failure, we could see new lows form. A move to the Oversold level would have to take us through the 500 support level, a very strong economic and psychological support. Resolution is coming, but it may take some time to unfold.
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