Saturday - The Longer-Term Outlook
The Short-Term Trend
Jim Cramer warned of a short-term correction in yesterday's podcast of his TV show. I think most people would agree with him. This chart looks extended.
I'm worried about stock prices over the next few weeks with such an overheated stock market headed into earnings season.
This chart of the XOP could be the first signal that stocks are ready to consolidate about six weeks of gains.
Money may be starting to move into the defensive groups.
Time for some profit-taking in the small-caps?
The Long-Term Outlook
The ECRI has been dipping lower all year, and M2 rate-of-change has been in consistent decline. This has been happening while stock prices have continued to work higher and higher. It is a worrisome combination.
However, on Friday the bulls received a favorable data point with a pop of the ECRI above its 4-week average. This is a tiny bit of good news for the economy although we obviously need to see the ECRI continue to show strength in the weeks ahead.
This chart shows that there can be quite a bit of lag-time between when the economy slows down, and when stock prices start to experience selling pressure. It is also interesting to see how well stock prices correctly anticipated the turn higher in the economy in early 2016.
The Long-Term Leader List
The strongest ETFs are blue, additional leaders are green and red indicates recent weakness. The S&P500 is the benchmark. Disclaimer: This list is not a recommendation to buy or sell.
This is the long-term leader list. It is my attempt to keep my accounts invested for longer periods, and to avoid frequent trades.
There are several other ETFs that could easily be included in this list such as Health Care, Emerging Markets, Dividend-Payers,...which shows just how broad based and bullish the market has been lately.
Financials have re-joined the long-term leaders with a very bullish looking weekly chart.
How is this for a beautiful chart?
Outlook
The ECRI index is pointing to weak economic growth in the months ahead, but Friday's ECRI index finally showed signs that it might have bottomed out.
The long-term outlook is worrisome.
The medium-term trend is up.
The short-term trend is up. Watching for signs of the next short-term downtrend.
Disclaimer: I am not a registered investment advisor. My comments above reflect my view of the market, and what I am doing with my accounts. The analysis is not a ...
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