Pick Your Poison

March 30, 2019

Weekly Market Outlook

By Keith Schneider


Look at the table above.

The 6 month returns the picture is not pretty.

The sectors that had positive returns are safety plays

One the other hand, the last three months paint an opposite story.

Will the short-term strength persist and overcome the longer-term overhead supply?

Meanwhile, all four key U.S. equity markets bounced this week up about +1% on average.

Gold retreated as did old Miners, and both look technically vulnerable

However, copper, an industrial metal, performed well and is holding a bullish phase.

What has not really hit mainstream news outlets is that Russia and the East have been steadily accumulating the yellow relic while reducing holding of U.S. government debt.

Does Putin know something that we don’t or just doing some long-term retirement planning and diversifying his holdings? (perhaps some real estate in Venezuela and the Ukraine).

The dollar rose this week unfazed by the continued drop in global central bank holdings of the dollar.

In fact, central banks have doubled their holding of the Chinese Yuan from two years ago to 1.9%, which is still small, but steadily gaining traction.

China and other Central Banks have been dumping dollars in favor of the Euro and other foreign currencies.

This week’s highlights are:

  • Risk Gauges improved significantly this week to neutral
  • Emerging Markets and growth stocks are leading the rally in Equities in 2019
  • Mid-Caps (MDY) recovered to a Recuperation Phase on the daily charts and looks ready to follow through
  • Sentiment reading improved with short term volatility retreating sharply after testing upper levels
  • Weekly charts still have a to overcome a headwind as shown on our momentum indicators
  • Copper showing strength which is a positive for the economy
  • If gold takes out recent lows, it will be leading indicator that stocks are about rally

Let’s not confuse fundamentals that can take years or even decades to manifest its impact on the markets with making money.

Just keep these factoids in mind when they align with price action because fundamentals don’t matter UNTIL they align with the technical!

For those of you who don’t want to decipher the dance between technical and fundamentals to beat the market, check out our Alpha Rotation Trading Model (it’s our best performing model in 2018).

It uses 5 key inter-market relationships to anticipate the markets next move.

This week, by moving back to a neutral reading.

It’s now poised to rotate out of its profitable bond position. (for more info go here)

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