Breaking Up Is Hard To Do

February 9, 2020

Weekly Market Outlook

By Keith Schneider

blankThe Senate acquitted President Trump this week ending the impeachment saga and China reduced tariffs on $75 billion dollars of US exports. Equity markets loved it, closing up over +3% on decent volume.

The overall picture for equities is still murky despite the move to all time highs in the S&P500, the Dow Industrials, and the Nasdaq 100.

The Euro looks like is heading to par against the dollar and could be an early sign that the EU could implode sooner than some expect.


This week’s highlights are:

  • Utilities, and Risk Off plays underperformed, confirming strong price action
  • Growth stocks continue to lead value and the ratio is hovering at decade plus lows
  • The S&P 500 had a Doji day as it climbed to new highs which is inconclusive on future direction
  • Risk Gauges are still showing Risk Off despite the run up to new highs
  • Real Motion indicators did not confirm price action on both daily and weekly charts in both the Dow and the S&P 500
  • Market Internals continue to diverge from bullish price action
  • Volatility firmed holding above both its 50 and 200-day moving averages
  • Energy continues to weaken and hit new lows
  • The Euro is under extreme pressure and looks ready to test par with the dollar as Britain finally Brexited
  • Gold is stuck in a 5-week trading range and a breakout either way could have some serious follow through.
  • Semi’s are still the leading sector, but they have a major momentum divergence if they break under recent lows. If SMH does break it will signal a major market top.

Looking at this week’s highlights, it’s clear that we are getting some very mixed signals about the next move in the market.

Our sense is that the next move will be a very large one from current levels. Therefore, it is particularly important to watch all key indicators and not miss any inputs which is why we are doing a very special release of our Complete Trader program right now (for a limited time).

Best Wishes for your trading

Keith Schneider


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