|technical analysis, trading systems, investing, market-timing methods, stock market, money management
Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
May 20, 2019
War. What is it good for?
For uncertainty, chaos, and unsettling financial markets.
Preview from my weekly report*
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Historically, seasonal tendencies would support an unsettled market outlook. Stocks have been somewhat bearish from 5/20 through 5/23. Stocks have been somewhat bullish from 5/27 through 5/31. Stocks have been choppy and mixed from 6/3 through to 6/12.
Sentiment indicators appear somewhat oversold for the short term but still overbought for the medium term. Investor sentiment became overconfident after the Q1 oversold price bounce for stocks, which was not a confirmed new bull market. It may take some time to fully correct that overbought condition, supporting an unsettled market outlook.
The percentage of S&P 500 stocks above their 50-day SMAs fell to 49%, down from 92% on 3/1/19. This shows a loss of bullish stock market momentum and continuing bearish momentum divergence compared to the S&P 500 price index.
Although the LargeCap S&P 500 stock price index ETF (SPY) is only 3.09% below its 52-weeks high, the following index ETFs are underperforming and bearishly diverging: Emerging Markets ETF (EEM) is 14.54% below its high, BRIC (BKF) 12.15% below, SmallCap (IWM) 11.85% below, Foreign Developed Markets (EFA) 9.96% below, Dow-Jones Transportation (IYT) 9.74% below, MidCap (MDY) 7.94% below, Dow-Jones Industrial (DIA) 4.41% below, and NASDAQ 100 (QQQ) 4.33% below.
Long-term U.S. stock sector rotation continues to give a mixed message, supporting an unsettled market outlook. Both defensive and cyclical sectors are demonstrating the best trend strength: Technology, Real Estate, Utilities, and Consumer Discretionary sectors are strongest.
Meanwhile, the following sectors remain relatively weak for the long term: Energy, Health Care, Financial, and Materials.
The U.S. Dollar rose to its 2-year high and remains systematically bullish for the long term. Traders buy the Dollar when they are concerned about risks to global stability.
Gold (GLD) fell sharply, erasing all gains of the previous week and more. This price action does not suggest a rush to safety. Gold remains systematically neutral.
Silver (SLV) fell to new 5-month lows and remains relatively bearish compared to Gold.
Crude Oil (USO) rose on news of escalating tensions with Iran. Oil turned systematically bullish for the long term. War in oil-producing regions would be bullish for the price of oil.
Foreign and Emerging stock markets remain weaker than U.S. stock indexes. Foreign markets are important because they have led the U.S. stock market at important price turning points in recent years.
U.S. Treasury bond ETFs (TLT and IEF) rose above highs of the previous 6-weeks, confirming short-term uptrends. Bonds also remain systematically bullish for the long term. Traders buy U.S. bonds when they are concerned about risks to global stability.
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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My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
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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