– State of the Market Address:
- The Dow finds itself back above 22,000.
- Shiller’s Adjusted S&P P/E ratio is now at 30.65 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
- Weekly RSI at 70 – overbought. Daily RSI is at 63.34- neutral.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,000 today (on weekly).
- Weekly Stochastics at 94.52- overbought. Daily at 88 – overbought.
- NYSE McClellan Oscillator is at +24. Neutral.
- Volatility measures VIX/VXX remains at suppressed levels Commercial VIX long interest increased slightly to 80K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) are shifting their positioning back to net neutral. Short interest has shifted slightly lower during the week. For now, the Dow is 10X, the S&P is at 3.5X net short while Russell 2000 and the Nasdaq are net neutral.
In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead. Plus, the “smart money” is positioning for some sort of a sell-off.
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