Special Bulletin: July 7, 2021 (1:30pm Update)

Certain Underlying Technicals Reveal Deterioration

A growing number of NYSE technical internals are beginning to show deterioration in the broader market. It also appears that the “Generals” (large caps) are leading the “privates” (small caps) into battle. Typically, that is not a good development. In response to today’s change in our “Core Four”, our Current Market Outlook has been downgraded to “Uptrend Under Pressure” with a yellow light as of 1:30pm. Currently, our “Core Four” stands with 2 green, 1 yellow and 1 red light (see above).

It is very possible that with today’s looming Fed announcement at 2pm EDT the market could respond positively and move our signal back to green within a day or two. Nevertheless, the signal is now yellow based on the action up to this point prior to their announcement.

If the signal stays yellow in the days ahead, it is important to remember that the major stock market indexes can trend higher for some time – even as underlining conditions continue to worsen. It is also worth noting that a rapid move to red is possible if the Fed disappoints or scares the market. We will let the math of the market determine that for us. Ultimately, the “Core Four” and our Current Market Outlook signal will align us on the correct side of the next major trend quickly. Stay tuned to this column in the days ahead.  

Presently, the CBOE Volatility Index (VIX) remains under its all-important 50-day moving average (mav). That is important for the bulls. Watch to see if that index moves violently higher immediately. If it does, be very careful.

What should investors do now? Freshen up your watch list and commit new capital only to your best ideas that are confirmed with a significant volume increase on price breakouts. Keep monitoring the US 10-year note rate as an immediate inflation gauge. Be on guard for a vertical violation. 

Have a Triumphant day! ® 

Ps. We have closed our Twitter and Facebook accounts. Read about our decision here and here.