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Sunday, July 14, 2019 8:24:48 AM
DP WEEKLY WRAP: New All-Time Highs, but Not for Small-Cap Stocks
By: Carl Swenlin | July 12, 2019
While the broad market indexes are currently making all-time highs, the S&P 600 Small-Cap Index (IJR) is struggling and remains about -14% below its all-time highs. This lack of small-cap participation is a concern, because the large-caps can't carry the market forever. The OBV is currently in a reverse divergence -- the OBV is making a higher high, but price is not. This tells us that price can't move higher in spite of increased volume.
Another set of S&P 600 indicators available on StockCharts.com shows the internal weakness of the small-cap index, with only about 45% of stocks above their 200EMA. This is almost 30 percentage points below the percentage of S&P 500 stocks above their 200EMA.
GLOBAL MARKETS
BROAD MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
The yield curve is inverted, meaning that longer-term interest rates are lower than shorter-term rates.
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: The volume for today's move to all-time highs was only 78% of the one-year average volume. We have another rising wedge, and yesterday the VIX touched the top Bollinger Band, so we should look for a short-term top early next week.
SPY Weekly Chart: This chart is totally bullish.
Climactic Market Indicators: Net advances are the only thing climactic I see on this chart.
Short-Term Market Indicators: The STO-B and STO-V turned up on Friday. That could be good for another short move up.
Intermediate-Term Market Indicators: These indicators are overbought, but could accommodate further price advance.
CONCLUSION: The market is at all-time highs, and the Fed is hinting strongly that we're probably going to get an interest rate cut at the end of the month. I don't get it. We have a rate inversion, and the market is overvalued. I am reminded of a Fed Chairman quote (I think it was Volker): We have the best economy that money can buy. At any rate, the volume this week was substandard, and, with small-caps lagging, the advance is not broad based. I think we're going to hit a rough patch soon.
Next week is an options expiration week, so we should expect low volatility toward the end of the week -- not guaranteed, but usual.
Read Full Story »»»
• DiscoverGold
Click on "In reply to", for Authors past commentaries
By: Carl Swenlin | July 12, 2019
While the broad market indexes are currently making all-time highs, the S&P 600 Small-Cap Index (IJR) is struggling and remains about -14% below its all-time highs. This lack of small-cap participation is a concern, because the large-caps can't carry the market forever. The OBV is currently in a reverse divergence -- the OBV is making a higher high, but price is not. This tells us that price can't move higher in spite of increased volume.
Another set of S&P 600 indicators available on StockCharts.com shows the internal weakness of the small-cap index, with only about 45% of stocks above their 200EMA. This is almost 30 percentage points below the percentage of S&P 500 stocks above their 200EMA.
GLOBAL MARKETS
BROAD MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
The yield curve is inverted, meaning that longer-term interest rates are lower than shorter-term rates.
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: The volume for today's move to all-time highs was only 78% of the one-year average volume. We have another rising wedge, and yesterday the VIX touched the top Bollinger Band, so we should look for a short-term top early next week.
SPY Weekly Chart: This chart is totally bullish.
Climactic Market Indicators: Net advances are the only thing climactic I see on this chart.
Short-Term Market Indicators: The STO-B and STO-V turned up on Friday. That could be good for another short move up.
Intermediate-Term Market Indicators: These indicators are overbought, but could accommodate further price advance.
CONCLUSION: The market is at all-time highs, and the Fed is hinting strongly that we're probably going to get an interest rate cut at the end of the month. I don't get it. We have a rate inversion, and the market is overvalued. I am reminded of a Fed Chairman quote (I think it was Volker): We have the best economy that money can buy. At any rate, the volume this week was substandard, and, with small-caps lagging, the advance is not broad based. I think we're going to hit a rough patch soon.
Next week is an options expiration week, so we should expect low volatility toward the end of the week -- not guaranteed, but usual.
Read Full Story »»»
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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