The markets—despite continued shenanigans in D.C.—were virtually unchanged since our last issue. Unemployment remains steady, the CPI is stable and consumer sentiment is very positive.
As you’ll see in our Advisor Sentiment Barometer and Market Views, market experts remain bullish, although we’ve seen a bit more selling this past week.
Wall Street’s Best Investments 809
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Market Views
Selling Elevated this Week
Among the Buying Climaxes (74), the Retailing sector featured heavily and among the Selling Climaxes (203) were Autos, Buildings and Precious Metals featured.
Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones. Selling climaxes occur when a stock makes a new 12-month low, but then closes the week with a gain. They are a sign of accumulation and indicate that stocks are passing from weak hands to strong ones. Our work shows that sellers into buying climaxes and buyers into selling climaxes are right about 80% of the time after 4-months time.
John Gray, Investors Intelligence, www.investorsintelligence.com, 914-632-0422, September 17, 2018
Positive for Now
It remains positive for now that the Power Shares Nasdaq 100 Index (QQQ) closed above the lower channel at 179.00, which I believe will hold. However, if the QQQ were to close below 179.00, I would expect more selling to take place testing the QQQ key support that lies just above the July 30 low of 174.27. For the bulls to gain control, the QQQ would need to close above 183.00, suggesting further gains to 187.00, followed by 191.00.
Dr. Marvin Appel and Gerald Appel, Systems and Forecasts, www.systemsandforecasts.com, 800-829-6229, September 17, 2018
Still Bullish
$SPX pulled back to its still-rising 20-day moving average, which was at about 2870 and that was been about the extent of the correction. As a result, the chart of $SPX remains bullish, as the Index is still in an upward-sloping channel and no important support levels have been broken.
The put-call ratio charts are rather non-descript at this time, as they are meandering sideways. Technically, the standard ratio is on a buy signal, and the weighted is on a sell signal, but neither has been particularly productive for some time now.
Breadth has improved this week, but both breadth oscillators remain on sell signals. The sell signals from a week or so ago had a minor effect, but have not been able to follow through.
Volatility remains low. $VIX probed up towards 15 a couple of times, but never closed above it, and now it is retreating again. We continue to feel that as long as $VIX continues to close below 15, it is not a problem for the stock market.
In summary, it looks as if once again the bears have lost their chance at creating some downside momentum. At this time, therefore, the picture remains bullish until proven otherwise.
Lawrence G. McMillan, The Option Strategist, www.optionstrategist.com, 973-328-1303, September 14, 2018
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