The market contributed to the bullish mien of the show, with the Dow Jones Industrial Average kicking in an 8.5% gain since our last issue. The economy also did its part; rates are stable right now, and the job market continues to improve. There is currently, on average, less than one potential employee for every job opening in our country.
Our contributors continue to be bullish, although with a cautious stance, as you’ll see reflected in our Advisor Sentiment Barometer and Market Views.
Wall Street’s Best Investments 814
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Market Views
Caution Remains
Given that we’re fighting the 200-Day Moving Average; we can set-up for a bit of a pause. But it’s news-sensitive. So, for now, China may be a topic ‘beyond the interim pullback’ discussed as likely in February (or part of it, perhaps coming right up). It also depends on ‘what level’ S&P is trading at such a time. Stay tuned in the weeks ahead as we see (for the moment) if we get a down-up-down Thursday.
Solid daily action lets equity markets, the Fed, and calmer monetary policy generally adhere to outlined expectations, as other wild cards (like China and domestic politics) remain pending or up-in-the-air. Discretion continues the better part of valor, especially after rallies (and our long-held warning of pullbacks after an upside extension into early-February).
Gene Inger, The Inger Letter, www.ingerletter.com, February 12, 2019
A European Warning?
The recent reduction in European growth rates appears to be the product of continuing trade negotiations worldwide and slowing growth in countries outside of Europe, such as China. With the global economy as intertwined as it is, any economic change outside of Europe, such as an alteration of the trading agreements between the U.S. and China, could profoundly impact economic activity within the continent. Further, what happens in Europe will likely affect economic activity in the U.S. over the coming year.
Ron Rowland, All Star Investor, www.AllStarInvestor.com, 800-299-4223, February 12, 2019
The Bear Appears
The first signs of bearishness are beginning to creep into the superbly strong rally that has taken place since Christmas. $SPX rallied into the 2720-2740 area this week, which is now resistance and has now backed off. Now we have our first sell signal.
So, $SPX may not trade straight down from here, but this is a severe warning signal. We have been warning against complacency, so to avoid being complacent, this signal should be taken.
Even without the sell signal, the $SPX chart is still negative in that it is still a series of lower highs and lower lows occurring below the 200-day Moving Average. This will be true unless $SPX can close above the major resistance at 2820.
Lawrence G. McMillan, The Option Strategist, www.optionstrategist.com, 973-328-1303, February 8, 2019
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THE NEXT Wall Street’s Best Investments will be published March 13, 2019
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