Markets are all in bull phases with both the S&P and the DOW hitting new all-time highs but showed some weakening momentum on the upside. Considering the seasonal patterns, we would see this as positive price action. Watch for a close beneath the 10-Day Moving Average for an indication of the rally failing.(+)
Volume patterns remain positive across the board for all four indexes. (+)
Positively moving sectors outnumbered the negative ones with risk-on sectors, such as Consumer Discretionary and Semiconductors leading the charge and both Retail and Transportation were up, indicating positive economic conditions. (+)
Explosive moves in foreign equities, especially China and Hong Kong, and emerging markets in general. A positive for global equities in general. (+)
The McClellan Oscillator still remains in positive territory and still working off some rich readings. The bigger picture shows the cumulative Advance-Decline line on new multi-year highs. (+)
Short-term rates are consolidating and digesting the Fed’s 50 basis point drop from last week. With the Fed saying inflation is over, the movement in rates looks positive for the market, unless economic news weakens and recession becomes more likely. Longer-term rates seem to be stabilizing and holding steady. (+)
The differential between value and growth is minimal and both remain in fairly strong growth phases. The 10-Day Moving Average seems to be an important level to hold, at least for shorter-term players. (+)
Five out of the six members of the modern family remain in bull phases with the one concern that Semiconductors, despite a strong week, is still lagging the benchmarks on the Triple Play indicator on a longer-term basis, a potential dark cloud forming for the market. (+)
Emerging markets and established foreign equities exploded this week, much of it based on China easing and improving valuations. (+)
Commodities across the board (Agg, Copper, Gold) all catapulted higher with global interest rates easing. Assuming no recession, this could be viewed as a goldilocks setup. (+)
Neutral
The 52-Week New High New Low ratio is running rich for both the Nasdaq and S&P, as we pointed out last week, however, intermediate to longer-term things remain positive. (=)
Despite the DOW making new highs, on a short-term basis, our color charts are showing weakness in the DOW. Longer-term, things remain intact. Nasdaq shows some weakening since mid-September. Our short-term reading for the S&P is negative, while the intermediate to longer-term remains positive. (=)
Risk gauges improved a bit, but are still neutral with strength in Gold and Utilities. (=)
The yield curve is steepening and returning to normal. Historically, it could still be a positive or a negative indication for equities. (=)
Risk Off
Despite the overall positive price action in markets, nervousness remains as cash volatility rallied 10% on Friday alone and respected, as we pointed out last week, its 200-Day Moving Average. (-)
