Market Outlook March 26, 2018

Technical Indicators

Trading View technical indicators point to sell for daily timeframes, with a mix of buy and sell among weekly timeframes among various indexes. Most indexes remain with a buy indicator evaluated on monthly timeframes.

Notably, SPY has a Strong Buy recommendation on the 30-day timeframe. BOND remains to have very negative technical indicators.

VIX has picked up considerably. In this case, buy and strong buy may be considered inversely when looking at outlook for the general market.

-2 = strong sell
-1 = sell
0 = neutral
1 = buy
2 = strong buy

Score gives 3x weight to 30-day indicators and 2x weight to 7-day indicators.

What others are saying

1 . Old Prof remains bullish on the market:

Short-term trading conditions improved again this week. Once again this shows why you need objective indicators rather than relying on your impressions about events. We continue to monitor the technical health measures on a daily basis.

The long-term fundamentals and outlook have been unchanged through the recent bout of volatility.

He also advises to watch the potential trade wars and to remain be weary of negative headlines:

Impressionistic reaction to headlines should not drive your decisions.

2. David Templeton at DisciplinedInvesting writes that the market appears oversold in the short-term and relatively normal long-term:

On a short term basis the indices appear to be oversold. One measure to evaluate is the percentage of stocks trading above their 50 and 200 day moving averages. The first chart shows only 15% of S&P 500 stocks are trading above their 50 day moving average. The chart shows that this measure can get reach the single digits, but mid to low teens is one indication of a short term oversold market.

Conversely, the percentage of stocks trading above their 200 day moving average is 51%. This percentage falls in the lower end of a long term range, with some oversold levels reaching into the mid to upper teens though.In other words, short term, the market appears oversold, but on a longer term basis, not so much.

3. At TraderFeed, Mark Hanna speculates as to the reasons for the recent volatility (trade wars, facebook, etc.), though there’s always a reason to be found to confirm positive or negative movements, and rarely are they correlated. Regardless, the outcome was a bad week:

Whatever the case, the market suffered badly this past week.    Facebook (FB) and it’s scandal hurt the NASDAQ early in the week, then #TRADEWARS(tm)! hurt Thursday and Friday.   The S&P 500 fell 6.0%! and the NASDAQ 6.5%! on the week

He goes on to point out that things still look good on a long-term basis:

Long term: Even after a massive one week selloff, the NASDAQ is only in the middle of a massive uptrend in it’s weekly chart.

Outlook

We are remaining mostly invested in the market. There are many headlines about a potential negative turn, yet there doesn’t seem to be any underlying reason and certainly no evidence of a long-term downward trend. While there is that possibility, it appears the risk is relatively low and there’s a strong chance of a continue bullish trend overall in markets.

 

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