A Choppy, Headline-Driven, Sideways Market

The bullish percents continue to point lower confirming the short-term downtrend.

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The number of 52-week lows is still a bit elevated which also confirms the short-term downtrend. 

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Bonds have found support and have started to rally.

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The 10Y yield has dipped (prices higher, yields lower).

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But the dip isn't enough yet to change the longer-term outlook.

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German yields provided advance warning that US yields were likely to dip.

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Interesting comments about corrections. This is via "VIX Squared" on Twitter.

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Outlook Summary:

I am expecting a choppy, headline-driven, sideways market between now and the November elections. I still plan to buy the dips for short-term gain, but over time I plan to continue to reduce my overall exposure to stocks.

The expected US economic growth rate is back down to the 2% level.

Higher rates are now a headwind for US stocks. The recent tax cut, the 300 billion spending increase, and the already out-of-control federal deficit are a set up for a very dangerous spike in interest rates.

Once again, the problems in Europe related to debt and the banking system are serious issues.

Something else to consider is the Mueller investigation. I worry that the headlines generated by the investigation may rattle the markets more than people are currently anticipating. 

Based on market seasonality, Mike Burk is projecting a medium-term stock market peak in May which sounds about right to me.

  • The long-term outlook is increasingly cautious.
  • The medium-term trend is down.
  • The short-term trend is down
  • The medium-term trend for bonds is up.

Outlook from Bob Doll, Nuveen  (Bob Doll)

  • Stocks are in a sideways holding pattern
  • Rising rates and protectionism are headwinds
  • Low risk of recession or bear market this year
  • White House and mid-term elections present political risks
  • 2018 could be mirror image of 2016
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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 recommendation to buy, ...

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