– State of the Market Address:
- The Dow remains above 23,000.
- Shiller’s Adjusted S&P P/E ratio is now at 31.50 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 82 – overbought. Daily RSI is at 74 – overbought.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,200 today (on weekly).
- Weekly Stochastics at 98 – severely overbought. Daily at 84 – overbought.
- NYSE McClellan Oscillator is at -20.Neutral.
- Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest decreased slightly to 85K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) are shifting their positioning back to net short. Short interest has shifted slightly higher during the week. For now, the Dow is 7X, the S&P is at 3X net short, Russell 2000 is now at 9X 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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