Category Archives: Member Only

Risk On!

Last Thursday the 10-year treasury yield took out the September swing high of 1.903% and closed above it on a weekly basis.  So from the yield perspective, this is a risk on environment, money will be forced to flow out of the safe haven into equities.  The defensive sectors (XLU, XLP and XLRE) were promptly sold off to form a weekly cycle high.

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S&P 500 Cash Index Cycle Location 11/01/2019

The S&P 500 cash index closed at 3066.91 at a record high last Friday.  Even though it is a hair below the breakout target at 3076.67, it could easily take down the target next week if the trade war news continues to be positive.  The Q3 earnings prove to be better or not as bad as feared.  It seems that all the stars are lined up to have a year-end rally. 

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More Signs of the Resumption of the Bull Market

Last week the S&P 500 cash index closed a hair below the all the time of 3025.86.  No one can argue the strength of the price action.  It is climbing a huge wall of worry and repeatedly dispelled the worries of an imminent recession that have dominated the media.  We came to this conclusion by examining the internals of the market.

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Where is the Euphoria?

One of the world’s most successful mutual-fund managers, John Templeton once succinctly summed up the mass emotions in different stages of the stock market as: Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.  The market is near all time high, yet the sentiment is very negative as the skepticism is bountiful about the many issues that have held the stock market hostage for the last 20 months.

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Technical Rotation or Breakout?

In the last few weeks, value stocks have out performed the momentum growth stocks.  The rallies in value stocks made an appearance of a healthier looking market.  With a broader participation, is the market ready for a breakout? Or is this a purely technical rotation?

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