Special Bulletin: October 29, 2019

Technical “internals” continue to confirm the uptrend.

The S&P500 went deep yesterday and again today with fresh all-time highs and created a walk-off celebration on Wall Street! The party was somewhat muted, however, due to the failure of the Nasdaq and Dow Jones Industrial averages to do the same. The technical condition of the stock market remains sound and our Current Market Outlook is “Market in an Uptrend” with a “green” light. Our “Core Four” internal indicators are all green. As we wrote two weeks ago, “…the uptrend is underway again.”

Another curious divergence happened today regarding the new 52 week high and low readings on both the S&P500 and the Nasdaq. While there were many more new highs than new lows on both exchanges (a positive), the literal number of new highs actually fell on both and the number of stocks at new lows rose on both. (a negative) While one day does not make a trend, investors ready to take a swing should be watching for more signs.

Now for some good news: the active number of Distribution days has been reduced recently due to meaningful price gains on the major indexes. We continue to stand by our September 27th statement that it does not look like a major slump is near for stocks, based on the math of the market. Bear in mind that conditions can change quickly due to unforeseen events and that “it ain’t over till it’s over.” (Thanks Yogi!)

The Fed is widely expected to give its best pitch and bring relief to the market tomorrow with another rate cut. A balk by the Fed would be very unwelcome and seen as a blown save.

What should investors do now? Take the investing world serious. Continue deploying capital into quality investments that sport rising relative strength. Remain focused on the major indexes and their 50 day moving averages and watch the number of stocks hitting new 52 week lows for signs of growing weakness.

The bulls are swinging with all their might and are rewarding their fans with all-time highs, while the bears are hesitant to leave their dugout. Which team are you rooting for? 

Have a Triumphant day! ®