While NASDAQ has taken out the Jan 2018 high two weeks ago, S&P 500 cash index just registered a weekly buy signal, the DOW is lagging behind. The daily DOW index is tightly contained in a triangle. The divergence between DOW, NASDAQ and S&P 500 is reflecting the deep concern of the trade war.The DOW is representing the multi-international companies that can be inflicted more pains than the domestic companies. Boeing has registered a sell signal during this weakness. Boeing investment position should be liquidated. Boeing has been a favorite in 2017, Boeing could be falling out of favor for the 2nd half of the four-year cycle.
While it has been a choppy sideways market for the last five weeks, it has not produced long term sell signals for any of the indices. The market is still bullish. The earliest time for it to turn bearish is September 2018. We have to be on the long side before the market turns.
Besides NASDAQ, the small cap Russell 2000 is also healthy. This really confirms that the 2nd half of the four-year cycle will be more domestic oriented with tech as the leading sector.
Facebook has been taking a lot heat lately. Facebook has been under performing in the FANG group since last July 2017. We believe the surveillance economy business model is faulty. Eventually the Facebook users will realize the abuse of their personal data and perhaps quit using the free service. Facebook is not a product that people need to have to live. We suggest our readers to liquidate Facebook position. The future of Facebook can be quite challenging.
As we mentioned before, the market can be choppy until July. So tread lightly. Only invest in the best performing stock in the best sector. Sometimes it pays to be in cash. When the opportunity comes, you are fully ready.