Where’s the Pitch?

Choppy trading continues in the markets this week, with stocks down overall more in the US than abroad. Volatility levels continue to fall after the February spike, but ranges are still larger than at this time last year. The Buy signal will be celebrating its two-year anniversary, and we are still seeing green across the board in the Core Indicators. There have not been any new or additional signals since then, which is surprising over such a long cycle, and that observation is the reason that we have been patient and holding cash. We do strongly believe that the probabilities favor another buying opportunity this year, although from the recent price action, we find it difficult to make a more grounded prediction. The global Universe Trend indicator is falling, but it has not reversed in the same way the US version has. As a reminder, this indicator measures the percent of stocks in the measured group that show positive trends on their underlying Point and Figure charts. While we have not seen any erosion in the Core indicators, as time passes, the chances of a reversal increase, which could create that nice buying opportunity in 2018.

 

The Tactical Indicators remain Neutral this week. The 10-week moved to the 44% level, which is past the key 42% level that we have been watching. Thus, technically, a Bull confirmation has occurred, yet without much continuation as we have fallen back to around 40%. The Overbought/Oversold Indicator continues to fluctuate around the Bull Trend Average, which still has a rising slope, although perhaps flattening. Is this the extent of the correction for the MSCI All Country World Index or are we going to seeing another wave of selling? A 5-6% rise would take us back to the Overbought level. However, another shakeout of 5-6% takes us down to the low-risk Oversold level. It is difficult to predict the short-term direction of the market from these points. To reiterate, there is still a very strong economic and psychological support at the 500 level in the index.

 

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2018-03-16T13:10:09+00:00 March 16th, 2018|Uncategorized|