Fueled by great first quarter earnings releases from Mega-cap tech names and other large companies on Thursday, the stock market took a good step towards reviving its fledgling recent rally attempt. After the close of the market, several large companies (technology giants, in particular) released earnings that were also received well by investors and as a result sent the Nasdaq futures soaring overnight. This bodes well for the markets action coming on Friday (27th) and may prove to be enough to improve our outlook to only a first stage sell-signal, and maybe even a resumption of a green light. But, we must first wait and see how Friday’s market action unfolds, especially in light of the pending release of the initial 1st quarter GDP (Gross Domestic Product) growth reading at 8:30am. Wall Street is looking for a 2% gain, down from Q4’s 2.9% level.
Technically speaking, our proprietary 3 stage sell-signal risk management discipline is still in stage 2. That level suggests caution should be taken by investors, and means that we have been holding more cash than usual and employing other defensive/hedging techniques in certain of our equity strategies. Our risk management system has done an excellent job of keeping us aware of and in-tune with the markets weakening condition since mid-January. Due to our proactive risk management process, our equity strategies have fared very well in 2018 both on a relative and an absolute basis. In the weeks ahead there will be a great deal of news for investors to digest; economic, geo-political, earnings related & tariff minded. This will no doubt add to the already volatile trading environment, but as a silver lining, it should ultimately bring clarity to the stock markets next big direction. We will be monitoring the markets internals each day and will be ready to respond for our clients, offensively or defensively, as the conditions warrant. Stay tuned, and Have a Triumphant day! ®