One thing you can count on in the markets is change! Just when we were moving along nicely, Trump threw a wrench in the works with his new war on China tariffs. That caused a few down days, but we did have a bit of recovery yesterday.
The economy continues to sail smoothly, however, with unemployment and inflation low, and the housing market is doing well. As a result, and as you’ll see in our Market Views and our Market Sentiment Barometer, sentiment remains bullish, but with a dose of caution.
Wall Street’s Best Investments 817
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Market Views
Pare the Weak
The market has been under severe selling pressure for six days since the tariff tussle got underway two weekends ago, with today’s broad declines enough to crack the intermediate-term uptrend that began back in January. Big picture, it’s still a bull market, but the breakdowns in many stocks and indexes tell you to pare back by selling weak performers and cutting back on new buying. We’re shifting our Market Monitor down to a level 5.
Encouragingly, though, despite the declines many stocks—while taking on water—are holding key support.
Michael Cintolo, Cabot Top Ten Trader, www.cabotwealth.com, 978-745-5532, May 13, 2019
Lock in Profits on High Flyers
Last week, as expected, the DOW closed below 26,000 and stayed below that figure for four days, but rallied strongly 470 points off its lows on Friday. The market seems to be having an identity crisis, and is not sure where to go next. So, to be safe, we would be locking up profits on those high performing stocks. We would still continue to have stop-loss orders 10% below the market in view of the North Korea situation.
Joseph Cotton, Cotton’s Technically Speaking, www.cottonstocks.net, 727-289-4436, May 13, 2019
Maybe a Minor Correction
It looks and feels like we are in a minor correction. At this time, I do not detect anything worse. Our intermediate-term outlook for US stocks remains positive and we expect to see higher prices on the other side of this correction. One potential problem is the level of bullish opinion in the sentiment surveys, which is getting rather high. Countering that we have a level of underlying fear that was highlighted by the recent surge in the VIX. All told we are still on track with a chance of further correction.
John Bollinger, The Bollinger Band Letter, www.bollingerbands.com, 310-798-8855, May 11, 2019
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