Equities Rise While Risk Gauges Retreat

February 24, 2019

Weekly Market Outlook

By Keith Schneider

All four key US Equity markets continued their relentless climb up, +.72 % (on average) over the shortened week., However, there were some noteworthy changes in leadership. The most obvious one is that US global leadership is waning as the baton passed to Emerging markets, China and Hong Kong.

In fact, our quant based model Alpha Rotation, (one of five we have created), just scaled out of some of its long positions in US stocks which were initiated in mid-January. One of our model’s inputs are our Risk Gauges which are driven by intermarket analysis. They have been backing off to neutral for this last bit of the run up.

This week’s highlights are:

  • All four (SPY DIA QQQ.IWM) benchmark indexes are now above their 50 week moving averages
  • Weekly Charts on the benchmarks still have negative momentum patterns just above current levels
  • Base Metals, Copper, and Gold Miners all had a stellar week’s with copper breaking out above it 200 DMA
  • Semi-conductors, continue to lead the rally

Considering the weak economic numbers, it’s not surprising that market gurus such as Gundlach (Double Line Capital) still believe we are in a bear market. Not surprising, our longer-term momentum indicators remain negative, so the next signal from Alpha Rotation should be a doozie.

(For more info on Alpha Rotation click here)

Have a great week!

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