Bears Grizzled and Going Vegan

January 19, 2020

Weekly Market Outlook

By Keith Schneider

US Equities made mincemeat (for those vegans’ please substitute meat with a BYND burger) of the bears as last Friday’s bearish engulfing pattern failed with equities again roaring to new highs.

All key U.S. equity indexes are now up on the year led by NASADQ 100 (QQQ) which is up more that 5%.

This is more than one would make sitting with the U.S. long bond for over a year.

However, there is a clear disconnect between market action and some key risk metrics.

One glaring disconnect is that Utilities are outperforming the S&P500 on a short-term basis, which is generally an excellent risk-off indicator.

It is highly unusual for this to occur when stocks are hitting new all-time highs.

This week’s highlights are:

  • Risk Gauges slipped to bearish before recovering back to a weak neutral reading
  • Bullish market phases remain strong across all time frames for U.S. equities
  • Value stocks continue to lag
  • Gold successfully tested its recent gap area but still needs to clear its 10-DMA and take out its 6-month calendar range before going parabolic
  • Emerging markets followed through and look poised to gain verses U.S. stocks
  • Sugar (CANE) which we highlighted last week confirmed a breakout on weekly charts, clearing it 50-week moving average, and it is poised to take out a 9-year trendline
  • Market Internals and volume regained both their footing and confirmed bullish price action

So, speaking of Beyond Meat, we had another great discretionary trade using our Real Motion indicator which made it extremely obvious that its downward price action to new lows was seriously diverging from its momentum.

This is exactly what our proprietary Real Motion Indicator is designed to find.

At its peak from our entry we were up almost 75%, and we sold portion of our position up almost 70%.

Not bad for being in the trade for only 6 days.

To find out more about this indicator, and this week picks looking for similar setups please click here.


Best Wishes for your trading,

Keith Schneider

CEO
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