Bull Vs. Bear. The Line In The Sand?

And yet, investors here at home seem to think that the U.S. will be immune to slowing global growth. Hmmm...

Maybe The Fed Caved Because...

At the very least, we may want to consider that Powell's bunch didn't cave to either political or market pressure. No, perhaps the Fed's new "patient" stance is tied to door number three: #GrowthSlowing.

Yes, it is indeed positive that the Fed has said it won't accidentally drag the U.S. into recession by going too far with their rate hikes. And it is also positive that everybody expects a deal to get done with China. From my seat, the argument can be made that ending the trade spat could possibly mark an end to the #GrowthSlowing movement and reinvigorate global economic growth.

Which brings us back to the question at hand. Will stocks break above the 200-day and send an all-clear signal to bullish investors near and far? Or have the bulls used up their lot of good news in getting back to the 200-day?

Time will tell, of course. But, I for one, am going to continue to watch the action in the bond market as a "tell" on the issue of global growth.

Weekly Market Model Review

Now let's turn to the weekly review of my favorite indicators and market models...

The State of the Big-Picture Market Models

I like to start each week with a review of the state of my favorite big-picture market models, which are designed to help me determine which team is in control of the primary trend.

View My Favorite Market Models Online

The Bottom Line:

  • While the bulls appear to be in control of the game from a near-term perspective and it is clear that the intraday dips are being bought these days, the status of my Primary Cycle board indicators remains sub-par. This is disconcerting to say the least and I view the message as a warning that this may not be the best time to throw caution to the wind. 

    This week's mean percentage score of my 6 favorite models held steady at 48.9% versus 48.9% last week (2 weeks ago: 47.8%, 3 weeks ago: 41.9%, 4 weeks ago: 46.1%) while the median also was unchanged at 46.7% from 46.7% last week (2 weeks ago: 45%, 3 weeks ago: 40%, 4 weeks ago: 55%).

The State of the Trend

Once I've reviewed the big picture, I then turn to the "state of the trend." These indicators are designed to give us a feel for the overall health of the current short- and intermediate-term trend models.

View Trend Indicator Board Online

The Bottom Line:

  • After a +16.44% jaunt higher in less than six weeks, a pause in the action was to be expected. The bottom line is the recent rate of ascent was unsustainable. My view is the first four weeks of the blast "corrected" the fear/algo-induced panic that occurred from 12/14-12/24 as the big worry (Fed Overshoot) appears to have been resolved. However, with the market now back to its 200-day moving average and in an overbought condition, the bulls resolve is being tested. The chart action so far has been encouraging and continues to give the bulls the edge in the near-term. But, again, stocks are overbought and a further pullback would not surprise anyone.
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Disclosure: At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none - Note that positions may change at any time.

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