The Nasdaq and S&P 500 indexes scored all-time highs today. Even better, they did it with an increase in daily trading volume. This action has prompted us to upgrade our current market outlook to “yellow”. If it weren’t for the presence of certain technical indicators that are suggesting internal deterioration is happening to the markets health, our signal would be green.
Many investors are wondering if last weeks severe one day drop will in hindsight prove to be the “first shot across the bow”. Of course no one knows yet. Interestingly, last weeks rare, technical “sell signal” is still in force. Even today’s bullish action wasn’t enough to negate the signal yet. Whether that signal proves to be early or not is irrelevant at this point. Our change to a “red” light last week was wrong. On Wall Street, the only thing worse than being wrong is staying wrong. Fortunately, we continue to have various levels of market exposure in our strategies, and even increased the levels in 3 of our 7 strategies within the past 48 hours. We are pleased that we exited our hedges very early this week too. Be certain though, we will remain vigilant to take defensive steps if the deterioration continues and support levels are breached again.
Have a Triumphant day!