– State of the Market Address:
- The Dow is now below 24,000
- Shiller’s Adjusted S&P P/E ratio is now at 31.23 Off highs, but still arguably at the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
- Weekly RSI at 50 – neutral. Daily RSI is at 30 – neutral.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,800 today (on weekly).
- Weekly Stochastics at 62 – neutral. Daily at 27 – oversold
- NYSE McClellan Oscillator is at -68. Oversold.
- Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest has dropped substantially and is now only at 22K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) have maintained their positioning. For now, the Dow is 5X, the S&P is at 4X net short, Russell 2000 is now at 4X 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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