Last week was a mind bender for those of us who have lived though various bubble markets. Today, we’ll discuss the state of the markets, and some thoughts on the economic cycle.
To start, lets take a look at the weekend summary report from Seeking Alpha. Pay particular attention to the S&P 500 Sectors performance part. Are you ready? This is pretty complicated stuff….
My summary – an incredibly in-depth analysis paper by Keith Richards:
Everything went down except Technology (and a minor move by Telecom & Discretionary stocks). End of summary.
Well, its good that these market drivers aren’t overvalued or anything…check the techs vs the SPX P/S ratio:
Bullish, but patient
I don’t want anyone jumping to the conclusion that I am bearish. I am not. The market is entrenched in a basing phase. This is great news, as it sets us up for the next phase, which is a breakout and bull trend. But that hasn’t happened yet. The SPX needs to bust past 4200 with conviction – and last for more than just a week. And it needs to do it with broad participation. You need the summary at the top to show more green in more sectors. Sectors that are not overvalued “AI” hype stocks.
The setup is there for a new bull market – per the bounce off of a longer termed trendline on the chart below…confirmed by a long termed ROC hook. Note that this is the exact chart with lines that I had shown you back in late 2021 with my circle at the 2021 peak (when I argued for a retracement). My Online TA course covers this timing strategy. Wait for a special price on that course soon. Now we must wait for a confirmation by the Advance Decline Line discussed in last weeks blog, amongst other factors. All of these factors are conveniently covered in my monthly Bear-o-meter reports. Here’s my latest report.
Thought of the day…
Nothing to do with the markets, but most of you, I am sure, have some sense of the free market philosophy. This quote applies as much to independent businesses as it does to us, as investors who are trying to invest with intelligence – by putting time and effort into improving our ability to do so. Time and effort – Such as reading this blog!
When the government runs the economy, you get rich by “taking”. When you have a free market economy, you do well by “making” Pierre Poilievre