4/24 CHARTIST HOTLINE
Tuesday, April 24, 2018
Stocks came under heavy selling pressure with Treasury Notes hitting 3% for the first time since January, 2014. The Dow lost 424.56 (-1.74%) while the Nasdaq gave up 121.25 (-1.70%). Declining stocks led by a ratio of 18:10 on the NYSE and 17:10 on the Nasdaq. Today marked the fourth consecutive trading session that had declining stocks in the lead.
There were 114 new lows on the NYSE, marking the third straight session above 100. There is no question that the surge in interest rates is impacting the market with an inverted yield curve becoming a distinct possibility. But remember what we said in the most recent edition of The Chartist: Negative yield curves are not useful for market timing but are an early warning indicator. On top of this, an inverted yield curve could still be months away.
All of the widely followed indices, with the exception of the Utilities, are still above their 200-day lines and, in the case of the Russell 2000, comfortably so. The S&P 500 and Dow are setting up for a test of 200-day lines in the next day or two. Once the 200-day lines are taken out, major support in evidence at the November lows could be in jeopardy.
The Actual Cash Account lost $14,847 (-1.13%) in today’s session. All 23 stocks in the Trader’s Portfolio finished lower led by Caterpillar (CAT), -6.20%. CAT finished 3.8% above its mental stop, while United Rentals (URI), -4.39%, is 2.2% away.
With our models in a positive mode, our advice for investors who are acting in sync with our real money accounts is to stay the course. Traders should be aware that LAM Research (LRCX) closed below its mental stop today and should now be sold.
Our next regular hotline is scheduled for Thursday, April 26th, 3:00 p.m., West Coast
