– State of the Market Address:
- The Dow finds itself back below 22,000.
- Shiller’s Adjusted S&P P/E ratio is now at 29.60 Off highs, but still…..arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
- Weekly RSI at 67.15 – neutral.Daily RSI is at 50.60 – neutral.
- Prior years corrections terminated at around 200 day moving average. Located at around 17,950 today (on weekly).
- Weekly Stochastics at 73.88 – overbought. Daily at 35.40 – neutral.
- NYSE McClellan Oscillator is at -15. Neutral to slightly oversold..
- Volatility measures VIX/VXX have spiked higher off of their historic lows during the week. Commercial VIX long interest was lower. Now at 80K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has shifted slightly during the week. For now, the Dow is 7X, the S&P is at 3X, Russell 2000 is net neutral and the Nasdaq is at 1.5X short. That is a substantial short position against the market.
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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