– 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 71.28 – neutral. Daily RSI is at 70 – neutral.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,000 today (on weekly).
- Weekly Stochastics at 87 – overbought. Daily at 98 – extremely overbought.
- NYSE McClellan Oscillator is at +37. Neutral.
- Volatility measures VIX/VXX remains at suppressed levels Commercial VIX long interest remained the same at 75K 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 7X, the S&P is at 3X, Russell 2000 is 3X net long and the Nasdaq are net neutral. 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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