– State of the Market Address:
- The Dow is fast approaching 25,000
- Shiller’s Adjusted S&P P/E ratio is now at 32.65 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 87 – overbought. Daily RSI is at 79 – overbought.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,500 today (on weekly).
- Weekly Stochastics at 96 – overbought. Daily at 91 – overbought.
- NYSE McClellan Oscillator is at +3. Neutral.
- Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest increased to 75K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) have maintained their positioning. For now, the Dow is 5.5X, the S&P is at 2.5X net short, Russell 2000 is now at 5X net short and the Nasdaq is 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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