The S&P is at a critical juncture right now. Support at just above 1540 was recently tested, which lines up with the 50 day MA. Meanwhile, RSI and MACD, which had been negatively diverging (i.e. going down while the index went up) for a couple of months continue to fall. Volume, which was contracting during the early part of the year as prices rose, is now beginning to rise as prices correct. This is another warning sign.
Earnings season is also well under way, with little to be excited about, given the mixed bag of results. And, like the last 2 years, such an unexciting earnings season may just lead into the typical spring correction. The Bollinger bands did signal a change in direction a couple of weeks ago, as noted on this blog – so I continue to bet that U.S. stocks are a bigger risk than normal at this time.
The TSX continues to underperform the US markets. The index has fallen below its key 200 day moving average (blue line)—and, as the chart below shows, this index has a tendency to peak in March or April quite predictably.
I remain 40% cash in my equity model, which was raised in March, and continue to hold low-beta stocks for those postions I do own.
Thanks Vancouver seminar attendees
Last week’s MoneyShow and West Vancouver seminars were a pleasure. My thanks to the great folks who attended the presentations. The two events had an abundance of informed pleasant people – and I appreciated the kind reception. I had a great time, I love your city, and will do my best to be there for next year’s show.