Point and Figure (PnF) graphs that make up the Bullish Percent Indicators point to a weak week. Little by little, many of the index and sectors are either shifting out to of the over-valued zone or are moving from an offensive position to a defensive position.
Index BPI: The latest index to make the move to defense is one of the two major indexes, the New York Stock Exchange (NYSE). One needs to go back to 7/25/2014 to find the NYSE over-valued. This helps explain why 2015 was a flat year for U.S. Equities. The other major index (NASDAQ) has not been over-value since 1/24/2014. That is one long dry run for the tech oriented index.
Sector BPI: This week, Staples shifted from offense to defense. Only dividend driven Telecom and Utilities continue to hold on to their offensive positions. Six of the ten sectors are still over-valued so there are pockets of strength in an otherwise weakening market. My expectation is that we will see the markets decline until the ugly U.S. election is over.
This is a good time to keep some powder dry as better buying opportunities lie in our future. The other course of action is to use options as HedgeHunter is doing with the Rutherford and Hawking portfolios.