Before updating the Bullish Percent Indicator workbook, I check my “gut” feelings as to what I think the table will look like. I was optimistic this week, but not completely accurate as the U.S. Equities market is not as strong as one might think. I was mislead by the strong Dow Jones Industrial Average.
Yes, there are sectors that are doing well. However, the ITA portfolios are not built around sectors as they are international in their scope. Sectors of the market do not cover all asset classes, while asset classes cover all sectors. This is why we use asset classes to build our portfolios.
Note that the two main indexes, NYSE and NASDA dipped in the percentage of bullish stocks. The decline was insufficient to move the X’s to O’s, but the direction was not in keeping with my expectations. Friday’s up market was not enough to change the overall direction in the broad indexes for the week.
The S&P 500 and DJTA did dropped the required percentage (~3%) to move them into the defensive camp. Keep in mind it is the daily changes that determine the X’s and O’s for the entire week.
There was a net change of 2 sectors that moved from offense to defense this week. We still see one-half of the sectors are over-bought. This is a warning signal to be wary or a time to ratchet up the risk averse neurons in your thinking.