This year the equity markets have been off to a good start with S&P 500 Index (SPX) up 8% through March 7. Our January newsletter indicated a topping market in four to six weeks and we appear to be there now. We like consumer products, utility, and Japan stocks at this time. We have new “out” or money market signals for the S&P 500 and Nasdaq 100 Index (NDX). We are still staying out of gold and bonds. Our analysis indicates that all style-box indexes have small positive momentum. All sectors have small positive momentum except that gold momentumis negative.
For the world indexes with small positive price momentum: U.S. dollar, London and S&P 500 indices are the strongest, according to our analysis. In addition, the emerging markets and Germany have negative momentum at this time in our opinion.
U.S. stocks and emerging markets sold out in late February, but bonds did not rise. We are inclined to believe this means that the large hedge funds and NY banks shorted emerging markets.
Short investors apparently do not have enough horsepower to succeed for more than a few days because the U.S. markets have since recovered. This market action may mean the U.S. market is going into a “rest mode” or possibly a small correction before going higher in a few weeks.
Because the markets can turn quickly, be ready. May the market be with you!