Excerpts: What has me concerned is the loss in momentum in the markets. Momentum ALWAYS peaks before the market peaks and the fact that the bulk of monthly MACDs for the S&P 1500 (inclusive of the S&P 600, 400, and 500) are on sell signals (56%) presents a concern. Momentum is now near the lows of the last two and a half years and highlights the deterioration we've seen in market internals since 2013 when nearly 90% of all 1500 members in the S&P 1500 were on monthly buy signals.
Summary
We’ve seen some pretty wild swings in the market lately but what is more important than the swings is the shifting flow of money from lower quality to higher assets. This is a hallmark for aging bull markets and was exactly the same condition we saw leading up to the 2000 and 2007 tops. Tops are a process and there is no set time table for how long this late-stage phase of the bull market will continue given global central bank intervention (just look at the BOJ announcement today). What is more important than trying to spot a top is to begin focusing more on risk management as risks are always greatest near the end of a cycle, and to shift more towards higher quality assets.
You might be right about next week . . . I know you have mentioned it...IE - the elections as the sell the news event...regardless of the out come. Been thinking about that possibility since June.
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