October 14, 2018
Weekly Market Outlook
By Keith Schneider
Equities markets on Planet Earth got crushed this week, averaging about -4.0% even after Fridays bounce which was not very convincing as volume was very light. US equites which has been one of the holdouts this year finally gave up the ghost.
The Russell 2000 (IWM) barely managed to stay positive on Friday’s bounce and is up just +.75% year to date. On the other hand, Gold and Gold miners roared on Thursday. Soft commodities defied gravity and put in a positive week.
The uptick in gold, strength in commodities and big cap value stocks add credence to the possibility that a long-term top is in place while shorter term we have several indicators that show oversold.
The highlights of this week’s market action are the following:
Considering the short-term oversold condition, we would not be surprised to see a quick bounce that fails and ends up with another test of the recent low or worse. Looking out a further, our longer-term quant based Alpha Rotation model (http://www.marketgauge.com/alpha/replay/) locked in some nice gains and issued a sell on October 4 for the S&P 500 and the NASDQ 100. We await the next signal either to buy bonds or re-enter stocks.