Special Bulletin: April 11th, 2019

With the full effects of spring beginning to sprout across the landscape, there’s more green than just the great outdoors. Our Current Market Outlook light remains “green” as the market’s solid uptrend has been resilient. The stock market almost succumbed to a late frost twice in March but managed to avoid slipping into a caution condition, or yellow light, as buyers emerged (not being afraid to see their shadows) and the indexes kited higher. With a gentle breeze of monetary policy change at its back and a return of the “Fed doves”, the stock market has continued to thaw and has provided many worms for the proactive and disciplined early birds. Thank you Lord!

After two close calls, the markets technicals (aka mathematical internals) returned to a fully in-gear market signal. A change to a yellow condition in our 3 stage sell-signal process did not happen, and in fact, actually went back to an “all-clear” zero stage sell-signal during the last week of March. Over the past few days, however, the internals have displayed subtle signs that the advance may be tiring. We make no predictions. We let the daily math of the market tell us about its own true health & directional bias. At this point, the markets direction is still up. Yet, investors could expect some resistance around these levels in the main indexes as they are near their all-time price highs reached last fall. Friday will be a big tell as Q1 earnings season begins in earnest with several big bank announcements.

Earlier this year we wrote about a technical chart pattern that we called a “higher low”. We suggested that investors, who may have missed catching the bulk of the indexes recovery in the first couple of months in 2019, may get another chance to buy on a meaningful decline if and when the market experienced its high probability pullback to a “higher-low”. We further suggested that a typical higher-low pullback, using historical norms, would likely develop by May. As of this date the popular indexes have not yet fulfilled that pattern. However, many individual sectors have experienced significant pullbacks to a proper technical higher-low in price and have created buying opportunities for the savvy & well researched investor.

While these are not recommendations, a few recent sector examples given for your study are the banks, aerospace, home-builders and retailers. Perhaps the market engages in a series of rolling higher-lows in various sectors as the indexes trudge higher. Or perhaps a sudden shock develops that drives stock prices sharply lower across the board. Either way, we stand ready.  

Have a Triumphant day! ®