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Technical Market Indicators
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March 18, 2019
Stocks: overbought with bearish divergences.
Preview from my weekly report*
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The S&P 500 rebounded to its highest price level since 10/10/2018, but it is overbought at two standard deviations above its 20-day SMA (simple moving average).
Sentiment indicators are overbought.
MidCap and SmallCap stock price indexes are lagging below their highs of 2/25/2019, thereby demonstrating bearish divergences.
Momentum indicators, such as RSI, Stochastic, and MACD, are lagging below their February highs, thereby demonstrating bearish divergences.
Breadth (advances-declines) is lagging price, diverging bearishly.
On-Balance Volume is diverging bearishly below its peak on 2/25/2019.
The percentage of S&P 500 stocks above 50-day SMAs is 80%, versus 92% on 3/1/19.
The percentage above 200-day SMAs is 59%, down from 62% on 3/1/19.
Historically, seasonal tendencies have been bearish for the week ahead.
Long-term U.S. stock sector rotation still appears Defensive and risk averse: Utilities, Real Estate, Health Care, and Consumer Staples are outperforming, suggesting cautious investor sentiment.
Meanwhile, economy-dependent Cyclicals, including Energy, Materials, Financial, Technology, Communication Services, Industrial, and Consumer Discretionary, remain relatively weak for the long term, also suggesting cautious investor sentiment.
The U.S. Dollar declined last week but remains systematically bullish. Global investors prefer the U.S. Dollar when they lack confidence in the global economy.
U.S. Treasury bonds rose again last week and remain systematically bullish. This also suggests diminished confidence in stocks.
Crude oil (USO) and Energy stocks (XLE) rose last week but remain no better than neutral for the long term.
Breadth is lagging price. The cumulative total of daily advances minus declines for NYSE common stocks peaked on 2/22/2019 and is now showing bearish divergence compared to the large-cap price indexes, such as the S&P 500.
The full report offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
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Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
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