Indicators Showing Signs Of Improvement

Good Monday morning and welcome back. We made it through the ECB meeting, the UK election, and Comey’s eye-opening testimony last week and well, the major indices are none the worse for wear. Next up is this week’s Fed announcement (where Yellen’s gang is expected to raise rates another 25 basis points). In addition, there is the question if Friday’s tech wreck will continue. From my seat, it appears that Goldman’s “negative Nancy” view on tech sparked some much-needed profit taking in the big tech names. And while the selling could easily continue for a couple more days, let’s keep in mind that end of quarter “window dressing” (which is technically illegal) tends to be a powerful thing. So, we would not at all be surprised to see some dip buying come in during what appears to be (well, so far at least) a garden variety pullback in the market’s technology darlings.

Since it’s the start of a new week, let’s get right to our objective review the key market models and indicators. To review, the primary goal of this weekly exercise is to remove any subjective notions and ensure that we stay in line with what “is” happening in the markets. So, let’s get started…

The State of the Trend

We start each week with a look at the “state of the trend.” These indicators are designed to give us a feel for the overall health of the current short- and intermediate-term trend models.

Executive Summary:

  • The short-term Trend Model remains positive, but only modestly so. A close below Friday’s low would turn this model negative. 
  • The short-term Channel Breakout System is on a buy signal. A close below 2403 would reverse the indicator to sell. 
  • The intermediate-term Trend Model is solidly positive. 
  • The intermediate-term Channel Breakout System is also on a buy and remains so unless the S&P closes below 2352 this week. 
  • The long-term Trend Model is squarely positive. 
  • The Cycle Composite continues to point higher for the next two weeks. 
  • The Trading Mode models are starting to waver. One out of the three flipped to “trending” last week, but this model requires two out otf three to confirm.
  • In sum, the price models are still positive, but are not as strong as they were last week.
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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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