Selling in stocks and other “risk-on” asset classes has accelerated since the warning in our last post and has pushed our Current Market Outlook to the brink of RED. Many technical internals in the broad market are flashing warning signs and are testing key support levels. The “Generals” (large caps) are even in retreat. Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light. Our “Core Four,” reflecting the recent weakness, now stands with no green, 3 yellow and 1 red light (see top of page).
The S&P500 held critical support today at its 50-day moving average (mav). Buyers did emerge and staved off a rout – at least for a day. While underlying conditions have worsened, the current stock market rally is hanging on by a thread.
We will be looking at any bounce off of the 50-day mav tomorrow and the next day to gauge its internals for staying power. Tops do NOT happen in a day. They are a process and take time to unfold. However, much damage can happen quickly when fear takes hold.
Speaking of fear, the CBOE Volatility Index (VIX) launched up through its 50-day mav in a manner that would have even impressed Richard Branson. That was bad news for the bulls and will continue to be so unless it retreats immediately.
What to do now? Keep your watch list of investments that are resisting the decline fresh (several exhibited strength today) and only commit new capital in the ideas that display a significant volume increase on a breakout. Keep monitoring the US 10-year note rate as an immediate inflation gauge. Be on guard for a vertical violation.
Have a Triumphant day! ®
The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice.
©2021 Triumphant Portfolio Management, LLC.