This volatility is out of sync with the strong economy. Job openings are up, housing starts and building permits are still healthy, and retail sales are enjoying a good holiday romp. But it seems to be politics (as usual) that is driving the market’s gyrations, including the ‘wall’, with Trump threatening to shut the government down due to lack of funding, China’s continued exposure as an international hacker and spy, and the continuing investigation into our leader’s affairs, especially as regards to Russia.
Nevertheless, while short-term sentiment has turned more bearish, long-term, market mavens continue to be bullish, yet expect the volatility to continue.
Wall Street’s Best Investments 812
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Market Views
Selling not as Widespread as you may Think
Selling Climaxes again outweighed Buying Climaxes but action was very light in both the Nasdaq 100 and S&P 500 with only one Buying and one Selling Climax in the Nasdaq 100 and only 4 each in the S&P 500. Most of the Selling Climaxes were generated outside the main Indices involving foreign ETFs and International stocks. Performance in these areas has been poor this year. The Selling Climax in the S&P 500 was generated by General Electric, which has halved this year.
John Gray, Investors Intelligence, www.investorsintelligence.com, 914-632-0422, December 17, 2018
Still on a Buy, but Cautious
In December, the QQQ has been trying to form a bottom. However, each rally has faltered, unable to get through resistance above. Today, the same was true. The QQQ opened lower, recovered its losses early, but was unable to get through 262.50, (old support that is now acting as resistance) and then joined the broad market in the decline to close – 3.65 points, -2.27%, closing at 157.43.
Our intermediate-term U.S. equity model remains on a “buy” as of October 1, (the most bullish condition possible). It is historically unusual to have this large a drawdown when our model is on a buy signal.
Dr. Marvin Appel and Gerald Appel, Systems and Forecasts, www.systemsandforecasts.com, 800-829-6229, December 17, 2018
Not Seeing a Rally Yet
Last week, the three major market indexes fell into “correction” territory—defined as at least 10% off their recent highs—at the same time. It was the first time the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) were in correction territory simultaneously since around the August 2015 “flash crash.” Prior to that, the broader stock market signal hadn’t sounded since January 2008, during the financial crisis, according to data from Schaeffer’s Senior Quantitative Analyst Rocky White.
If past is prologue, stocks could be in for a wild ride. From a specific technical standpoint, bulls are hoping previous 2018 lows hold, and the SPDR S&P 500 ETF Trust (SPY) $255 level could emerge as the next line of defense, per Schaeffer’s Senior V.P. of Research Todd Salamone’s latest Monday Morning Outlook. However, the latest short interest data indicates the shorts haven’t even begun to smell blood yet, which could put a lid on stock rallies.
Bernie Schaeffer, Schaeffer’s Investment Research, www.SchaeffersResearch.com, 800-327-8833, December 17, 2018
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