The markets internals have improved based on this weeks price & volume action. As a result, our Current Market Outlook has been upgraded, but since not all of our technical indicators have improved yet, our signal has changed to a “yellow” light. Currently, only a first stage sell signal remains in place out of a possible 3 stages of sell signals.
The North Korean missile news was well contained by the markets on Tuesday and that action signaled strong demand for US equities. Because of that market reaction, we began reinvesting significant levels of our clients capital back into leading stocks and index/sector ETF’s quickly and also eliminated/reduced our inverse ETF hedges to where only one of our strategies held less than a 5% position as of Thursdays close.
In the days ahead, the markets “2nd stage sell signal” from 2 weeks ago will either prove to be just plain wrong or just early. The next 2 weeks will be very telling for the markets uptrend and the Trump agenda. The Market finds itself stuck in the middle of a battle between the bulls & the bears. This current market situation strongly resembles the situation the President is facing regarding his economic & tax agenda as he is stuck with the Dem’s on one side and the GOP on the other. Should the markets start to reach new highs on powerful trading volume, that would be seen as a sign of strength and renewed optimism. On the other hand, the “bulls” don’t want to see the major indexes slice down through key moving averages on increasing volume (e.g. Distribution Days), as that would likely unleash more severe institutional selling.
Expect things to heat up in September as Wall Street traders return from their vacations and seasonal tendencies weigh upon the markets. As always, feel free to call us with any questions and have a Triumphant day!