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May 12, 2019

Weekly Market Outlook

By Keith Schneider


US Equities got hit hard, down -2.5%  on average, as the tariff war with China escalated. It sent stocks into a nasty retreat on a global basis. China got hit the hardest down -6.55%. In fact, there was not a single Global Equity (Country funds) index that had a positive return this week. Trade wars are just not good the the global economy.

Grandpa Russell (IWM) managed to hold onto its 200 day moving average with help from a monster rally off the low’s on Friday. It still closed under its 50 week moving average, so the jury is out on direction but it’s bound to be large either way.

Markets continue to be buffeted by geo-political stress on multiple fronts that include the trade war with China, missile launches by North Korea, and tensions with Iran with a possible closure of shipping lanes.

Last week our Alpha Rotation model moved out of long equities on Friday morning, well ahead of the nasty selloff (for more info on this quant based model https://www.marketgauge.com/ar-replay/?utm_source=outlook-20190512). We remain extra cautious,fluid and ready to adjust our our outlook based on fresh data.

 This week’s highlights are:

  • Risk Gauges went 100% negative
  • High Yield Debt versus Us Bonds (TLT) continues to show the most stress across our inter-market indicators
  • Volume patterns are showing distribution across two key US Equity indexes
  • Safety plays performed well (XLU) such as utilities and consumer staples (XLP) while spec sectors (SMH, IBB) got hit hard
  • Market Internals resumed it defensive posture with the High/low ratio rolling over along with the McClellan Oscillator
  • If Value Stocks trade up relative to Growth from current levels that will be another indicator that this monster rally is over
  • Emerging Markets are trading weaker than Established Markets and if this condition persists it will be another sign that markets are ready to take a breather
  • Market Sentiment hit oversold levels on a short-term basis  

We could be just a tweet away from a major melt up if the trade war gets settled as market internals and sentiment are short term oversold.  The other possible scenario is that we are on a slippery slope to major melt down with a triple top in the making.

On another note we would like to thanks all those that bought Mish’s book, Plant Your Money Tree: A Guide to Growing Your Wealth, which was released this week on May 8. It has already achieved a Number 1 ranking on Amazon in several categories. Thank you for all your support!!!

For those that have not bought it yet, please do , the book provides a simple compass for you to make money decisions of all kinds and can help you navigate these treacherous times.

  • If you're new to the market, this is you fast-track way to understand which way the markets and economy going.
  • If you're an experienced trader or investor, you will enjoy the step-by-step rules for entering and exiting big swing trades.

It’s the same process Mish used to win the award for the best trade of the year for 2018 from Real Vision. (not an easy feat considering the roster of traders that participated)

Go to https://www.marketgauge.com/plantyourmoneytree/?utm_source=outlook-20190512 to save 30% on your pre-order plus, receive a special $97 bonus for free!

Best Wishes for your trading!

Keith Schneider

CEO – MarketGauge.com

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