Equity markets in the United States retreated this week. When we look at the two broad indexes, NYSE and NASDAQ, the dip is minor. Only a few stocks turned bearish. Looking at the S&P 100 and NASDAQ 100, the information reveals a tad more as eight stocks in the S&P 100 turned south while 16 companies in the NASDAQ 100 dropped. Likely there is overlap so we can conclude at least eight (8) stocks moved from bullish to bearish.
When we see the three indexes that moved from X’s to O’s this week, we know some large-cap stocks cooled off. Continue to watch these changes as large-cap stocks are the last to move down in a bull market. Investors keep asking the question – When will this bull market reverse?
We are “not rounding the Covid-19 corner.” Instead, the number of cases is increasing and the growth is occurring from a baseline that is approximately twice as high as it was prior to the July peak. As the medical experts continue to state – we are in for a difficult winter. History tells us that the 1918-1920 flu did not abate in a few months. It was a long slog. This is no time to grow tired of the virus. Instead, it is time to “mask-up” and fight the dastardly disease.
The latest GDP data shows the economy dropped nine percent or the lowest since before WWII. I’ll be completely surprised if this recession does not at some point pull U.S. Equities lower.
If anything, it is time to tighten up the TSLO settings on your current holdings.
While Energy is still in the dumps, six of the ten sectors are over-bought. Four of these ten moved from offense (X’s) over to defense (O’s) this week. This is certainly not a trend. The reason for concern has to do with the underlying economic weakness and the ongoing pandemic.
For detailed information, pay more attention to the percentages on the left side of the table. Use the right side for a quick overview.
Below is the graph of movement for the NYSE.
The NASDAQ shows parallel movement to the NYSE.