Many seem convinced that market risk is elevated – perhaps at an all-time high. Whether it is uncertainty about the new President and policy, revisiting issues about valuation, or concern about foreign challenges – it is a popular time to be worried.
Wednesday, March 22, 2017 6:17 AM EDT
The S&P 500 finally flipped the switch on the bearish threshold I have described since the last bullish breakout to new all-time highs. At that time the stock market celebrated President Trump’s address to a joint session of Congress.
The market is very close to a short-term “sell signal,” lower part of the chart, from a very high level. Sell signals instigated from high levels tend to lead to more substantive corrective actions over the short-term.
SPX had a loss for the week after six straight weeks of gains. A decline beneath its weekly low at 23574.54 and Short-term support, both near 2320.54, gives the SPX an aggressive sell signal. VIX made a Master Cycle low on Wednesday, March 15.
Gold stocks continue to underperform the underlying metal. It is still encouraging that gold managed to get a buy on the back of the Fed rate hike but it will take time for the much larger run-up. We also discuss the US markets and VIX.
Q1 2017 will likely be the weakest period for economic growth of any rate hike since 1980; stock market earnings expectations are tumbling; uncertainty about the Trumpian pillars of stock market strength are surging.