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The Triumphant Core Four

NYSE Internals
Moving Averages
Professional Selling
Investor Sentiment

Special Bulletin: May 12, 2021


Look out Below! Or, Up Up We Go!

Attention please! The stock market is at a critical juncture. In the days (maybe just hours) ahead, the stock market will tip its hand and make an important direction decision. The S&P500 needs to hold above its all-important 50 day mav asap. Big test tomorrow.

On April 22nd we wrote, “High stock prices combined with low levels of total trading volume is NOT a good recipe for a continuation of a stock market rally. This kind of current action should raise a few eyebrows.”

And it has done just that, especially after today.

While today’s action was very unpleasant for most investors, it wasn’t totally unexpected. The evidence has been growing for days. For one, our official Current Market Outlook was downgraded to yellow 20 days ago based on the results of our daily proprietary process of studying the stock market’s internals, a.k.a. the “math of the market.” Additionally, over the past 2 weeks many breakouts of growth stock experienced immediate failures and severe price reversals, distribution days (professional selling) have grown in number, and last Friday’s all-time high on the S&P500 had pathetic volume to support (not!) it.

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light. The TPM “Core Four” internal indicators show 3 yellow and 1 red (see top of page). While the net result is still a yellow light, the signal is closer to going “red.”

Three weeks ago, we stated, “Make no mistake: The long-term trend is still up. What has changed is that under the surface the pros are stealthy becoming net sellers. At least at the present time and in small doses, so far.” Well, their selling isn’t so stealth anymore.

The CBOE Volatility Index (VIX) has soared well over a reading of 21. Fear is returning quickly. In the long run, that could turn into a positive.

We are near a flash point. The market is not excited about Biden’s “economic plan.” The market sees inflation ramping higher as a result of his Executive Orders, and his inaction. It’s as if the market is saying, “I grew with Donald Trump. I knew Donald Trump. Donald Trump was a friend of mine. Mr. Biden, you’re no President Trump.”

We noted a few weeks ago regarding earnings season that…“It’s not the results that matter as much as it is the markets response to the numbers. Great EPS releases that are met with harsh sell-offs is poor action and should be taken as a warning.” Well, are you listening?

Ed Carson at Investor’s Business Daily sized it up very well, “Investors should be reducing exposure. It’s OK to hold onto some winning stocks that are standing their ground or showing relative strength. But losers and laggards should be eliminated. Protecting your financial and mental capital is your top priority.

Yes, it’s always possible that Wednesday marked a low and that stocks will rally from here. After several days of losses, at least a temporary bounce from current levels wouldn’t be a surprise. But if it’s a rally that lasts for several weeks and months, you’ll have plenty of opportunities to make strong gains.”

Well said Mr. Carson. Well said.

What should investors do now? Keep going outside to enjoy some fresh air…and without a mask! Continue to monitor the US 10 year note rate as an immediate inflation gauge. If the daily NYSE new 52-week lows continues to increase- beware!

Have a Triumphant day! ® 

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

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.

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