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Santa Said Risk On (But for How Long?)

It’s been a fantastic rally for stocks over the past couple months as Santa Claus was coming to town. Now is where things get interesting.

As discussed, last week was really the last full ‘trading’ week of the year. With the Christmas and New Year’s Holidays happening mid-week you can count on lower trading volume for the rest of the year. And more than likely, the participation will be light (don’t want to mess up those bonuses for portfolio managers).

To top it off, news on the ‘trade war’ is positive this morning as China says they’ll reduce or eliminate tariffs on a number of goods in the new year in anticipation of an inked trade deal in the near future.

This news has been greeted with optimism in the futures markets as the major indexes appear poised to push to even higher all-time highs. What a (calendar) year for the stock markets! (I’m sure we’ll get a pile of statistics to chew on in the coming days and weeks – best market since 2013, etc etc).

But before you pop the cork and celebrate, a word of foreshadowing: on the technical front, this market is way over-bought (at least by metrics we typically track). And on top of that, the multiple on earnings has crept up pretty high.

Fortunately, word on the street is still pretty skeptical. But we’re seeing Wall Street pundits raising estimates and there is a lot of chatter from the retail investor about how great things are (even if they’re still nervous about the economy going into an election year).

It’s precisely these times one should be careful about getting sucked into emotional euphoria land.

Warren Buffet famously said you should be fearful when people are greedy, and greedy when people are fearful.

Well, this is a tricky spot. The major indexes have had huge moves in 2019. The temptation to chase performance and pile into big winners is like a Siren’s call for many. And the technical set-up is concerning as we’ve seen this market not only gap higher late last week, but it’s poised to do so again at today’s open.

We’re at two standard deviations above the 21-day trading average for the SPX. Based on the futures markets, we’ll go even higher that that this morning.

It’s no guarantee that the markets pull-back from here just because we’re over-bought… or in a shortened trading week… or because we’ve had likely two price-gaps higher in the last two trading days… or because we’ve had huge calendar-year profits for the year… or because traders want to start positioning for Q1-2020… or a host of other reasons…

But you get the idea… markets have a lot of reasons they could pull-back from here. If they don’t, it may be time to start revisiting Warren Buffet’s old saying again. Because if there’s no fear in this market, maybe there should be.

Then again, for you BigFoot users, this is exactly why we have a process instead of just using our gut. Sure, there are no guarantees in the world. But having a systematic approach to analysis and following a set of rules and rationales leads to more consistent behavior. That means fewer variables, and higher statistical predictability. Or, said another way, it helps reduce the potential for human errors by quarantining some of the emotions that often lead to poor decisions. So tell a friend – or if you’ve stumbled upon this blog for some other reason, give us a ping. We’d love to walk you through the system and show you how to put the power or both artificial intelligence and neural networking to work in your investment process.

Looking pretty over-bought here
There may be further to go, but the air is getting pretty thin up here

As a head’s up, next week’s blog will be pretty minimal. As is the norm for this time of year, I will spend some time pulling together data and doing annual projections for 2020. I will probably do a brief year-in-review snapshot as well. It’s pretty easy though – markets exceeded my expectations because earnings exceeded expectations. It wasn’t a major miss (I had a high for the year at 23% return – we’re currently around 27% on the SPX), but I was surprised to the up-side. Now that I think about it though, should I even say this? Don’t want to jinx things in the last few trading days of the year…

Thanks for continuing the read these musings. I hope you have a wonderful holiday seasons, a Merry Christmas from my household, and a Happy New Year as we step into 2020. May you as blessed as I have been…

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

How High from Here?

Last week managed to finish at all-time highs for the SPX. The question now is how high can we go?

While there is no pre-defined limit, our original 2019 projections had 3100 as a likely target. Given current momentum, the SPX may exceed this level either this week or next.

The question will then shift to whether or not we can hang on from here.

If history were to repeat itself, we’ll likely see a bit of a pull-back coming once this initial target is met. The fourth quarter can be tricky though, as holiday rallies are tough to anticipate.

Given the shift away from a more traditional “Black Friday” sales event, it’s possible the big move for this market is happening right now. It’s typical for holiday schedules and window dressing to make for a dicey December.

2019 has been a remarkable calendar year in terms of market performance. Of course, it was a sand-bagged number as the fourth quarter of 2018 really tanked. The technical set-up does not have a major meltdown manifesting in the data yet though. So we may finish with a pretty strong calendar year from here.

Below is a chart of the 2019 projection. Note that 3110 was at the top of the expected range. This does not mean the markets cannot get into rally mode and push past this. It only means the markets would be ahead of expectations – and perhaps a bit over-bought at that point.

The pull-back targets are of bigger concern for most professional investors. How far back is an expected pull-back? Key levels from here would be: 3024/3014/3000/2974/2944.

To put these numbers in context, it’s about a four-percent pull-back. That’s not exactly huge given the moves this year. (Although it would definitely take some of the fun out of things.)

The good news is the end-of-year low target is still about 3010. That’s pretty solid support for this trend.

We’ll see if the Santa rally pushes us to even higher all-time highs. For this week, look for those numbers to push higher.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Trade Winds Improving

Last week markets got a pop on ‘less bad’ trade news as China indicated a partial trade agreement may be on the table. This could mean additional planned tariffs would be suspended.

Markets viewed this as a positive and finished last week with a strong push higher.

While the news is good, the technical set-up for this week may have a quick down-draft to fill in a price gap for the SPX. There is technical support around 2930 or so — right at the 100-day moving average (the 50-dma is only 5 points higher).

Interestingly enough, the market is neither over-bought nor over-sold. It’s pretty much right in the middle of its 21-day trading range. So positive news from here could lead to a push higher (especially if the small price gap created last Friday gets filled quickly this week).

This is the first technical sign that the markets could be setting up for a break-out to the up side in a while. There is still a chance the sideways pattern could simply persist, but the price reversal last week was a good sign the 2900 is significant support for the SPX.

For this week, look for a quick dip down, followed by a potential surge to the up-side. Breaching 3000 on the SPX is possible this week, although it is unlikely the all-time highs will be reached. It would take a more definitive deal with China to spark that kind of move.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Ready Q4

End of quarter rebalancing may generate some volatility today. Otherwise, markets look like they are staged to continue their sideways oscillation.

There is little technically to suggest there is a breakout in either direction. Instead, it seems the all-time highs of the SPX remain resistance, and the 100-day moving average remains as support.

The big-picture story appears little changed. The Fed is supporting the markets by maintaining low interest. Trade war headwinds are preventing the stock markets from climbing much higher. So we remain stuck in this sideways pattern.

Until something material changes, it appears there is little the market should expect in terms of a major move in either direction.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Estimated range of SPX for week of 9/3/19

Uncertainly

A perfect storm of uncertainty seems to be brewing for this week. But that uncertainty does not seem to be the kind that will significantly derail this market — at least not this week. It just adds to the drama.

The set-up for the SPX has about a 100-point range for the week. That’s pretty big – but the test is near the top of the range.

The range is built around the small head-and-shoulders pattern that has been forming over the past several weeks. The left shoulder peaked at 2954. So the movement of the SPX will be interesting here as we approach the potential right shoulder. Do we break up or down from here? (hint: the trend appears to be up)

With Hurricane Dorian slated to hit the East Coast this week, this test could be tricky. While the storm does not change the geopolitical and economic mix much, it will be a meaningful distraction to productivity in an already-shortened ‘back-to-routine’ week (does that even make sense?).

Typically activity picks up in September as kids across the country are back to school. There is no significant holiday between now and Thanksgiving in November. And the shortened work-week post-Labor-Day-holiday often suffers what many shortened weeks do – heightened volatility as the market crams a lost day into 4 (and yes, this is mostly anecdotal, but it certainly ‘seems’ this way).

With Dorian in the mix, the question is also whether or not there will be a measurable impact to the economy in the form of a slowdown in productivity or massive damage that requires repairs.

Bottom line, the international picture has not presented any significant revelation the market is trying to digest. So the news cycle will likely follow Dorian’s impact for this week, with some side discussion about Brexit and interest rates. Throw in some ‘I hate the other team’ political banter, and the week isn’t really that out of the ordinary.

The technical picture, strangely enough, appears to have volatility narrowing compared with prior weeks. The question is more about whether or not the markets find support at these levels and grind higher, or if we stay in a sideways pattern with volatility for a while.

If the story remains unchanged, the support area for the SPX is about 2854, with consolidation happening in the 2900-2950ish range. Resistance isn’t really a factor here – it’s simply all-time-highs. And if those are taken out, that’s a good sign. The concern comes if the market closes below 2825. A breach of this level could mean more significant downside to follow.

For this week, just hang on. There may be a few whip-saws, but the data indicating a more significant decline hasn’t shown itself yet. We’ll see how many headlines traders try to play off of though.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Were Bears Just Invited to Dinner?

Let’s cut through the fluff and get right to the meat and potatoes of the market – did last week’s sell-off after the Trump Tweet announcing more China tariffs represent the end of the road for the bull market?

Too early to call. But judging from the futures markets, the balance has been upset. It looks like more than a 1.5% pull-back is on the horizon for the open today.

At this point, the markets — and the SPX specifically — would be best to stay above the June pull-back lows near 2725. That leaves some additional room to decline, as futures imply an open around 2875 or so today.

The challenge is in the economic data. With earnings still rolling along, but guidance still cautious, and the Fed lowering rates on eroding data — plus the rest of the world’s central banks already at lows — the ‘race to the bottom’ for rates could be accelerating. If that happens, it will get harder to stave off deflation.

Markets know this. After all, if 10-year money only yields 2%, how much up-side is expected in the long term? The problem is, the markets also know there’s been nowhere else to find yield, so the blue chips have been the ‘risk’ asset folks seem to have flocked to to extract yield. At some point, this riskier play may come back to haunt.

While it’s not yet time to worry, it’s time to be ‘on alert.’ The concern is that many investors have been watching for a signal that the bull is dead. The same investors that were forced into the market seeking yield may be the ones that get nervous and exit just as quickly. If so, we could see risk re-price quickly.

When do the bond substitute-ers run for the door? Who knows? But if risk is truly mispriced, when they do run for the door, the markets should notice.

The new issue that comes with the question is, how long before the bear trumpets become a self-fulfilling prophecy? At some point, every prior bull market has come to an end. Most believe this will be the case again. But how to recognize it?

The concern comes in how quickly sentiment seems to be shifting. Markets have been climbing a wall of worry for months – maybe even years now. Those little naysayer voices are getting louder though. At some point, what starts as a pull-back will become an actual bear event. Call me crazy, but I think the place to watch right now is those blue chips – the same mega-caps that have carried the index to all-time highs while masking the underlying weakness in small and mid-caps may be the very tell-tail that markets are turning.

Before you let your emotions get the best of you though, consider this: the trend is not broken, and every other pull-back this year has been similarly violent.

The issue is, there really isn’t any ‘new’ information that justifies panic. Trade is still an issue, rates are still super low, and TINA is still forcing yield-seekers into higher risk assets. The Fed has also maintained its commitment to as much transparency as it can muster, all but showing us the hand they’re holding as they make policy. So there’s not an issue of transparency. There’s simply a question of when will investor sentiment shift enough to move markets into bear territory?

If you have the answer, by all means, share. Otherwise, we’ll just have to stick with the data and the key numbers. This week, the SPX will likely open around 2875 or so. The week could get ugly though. If the market doesn’t find a bid, the 200-day moving average may be in sight in the next couple of weeks. That’s down around 2790.

The “Oh Crap” level is below 2744 or so. This would indicate a close below the June lows. It would also be a ‘lower low’ in the pricing pattern. While it’s unlikely the markets will fall that low this week, it’s a number to keep in the back of your mind. A breach of this level — or the intra-day lows of 2728.81 — would be a bearish signal. At that point, the SPX is likely to go into office correction territory. We’ll take a deeper dive in this blog should those events occur.

For now, look for a rougher week in the markets — or certainly a rough Monday. The BF database is still over 77% long, but we can expect that will shift over the week should volatility continue over the next few days.

This is a normal part of markets. Not every day goes up. And we’ve been spoiled with low volatility for a few years now. It’s often important to remind ourselves of this. Keep perspective – investing is long-term, and this is all part of a market. This is also where opportunities are born. So we’ll be keeping our eyes open.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Here Comes Earnings Season

The stage is set for an exciting earnings season. Guidance is one thing, but this is where the rubber to meet the road. Can earnings actually grow from here? Or have we seen peak earnings growth for this economic cycle?

It may not matter… yet. The Fed has all but assured markets a rate cut is coming. So there’s little incentive to run for the fixed income markets. There really aren’t a lot of options for investors to find yield — or any returns for that matter — outside of select real estate markets or equities markets. So a multiple-expansion rally is not out of the question at this point.

The funny thing is, while the fundamental story driving this market higher has not changed, the technical picture has become a mixed bag for the S&P 500. The rather orderly expansion continues to behave calmly as the day-over-day pricing break new highs. In fact, five of the last six trading weeks have finished positive.

But there’s more to the story than just printing higher highs. The SPX is above it’s 50, 100, and 200-day moving averages. And it’s now more than 1.5 standard deviations above its 21-day trading average. By those figures, this market is over-bought.

So which is it? Orderly or over-bought? Perhaps both. The thing is, despite being over-bought, there does not seem to be significant pressure for a price correction. Now that 3000 has been breached, the index will need to test this level to see if it will maintain support. Otherwise, a pull-back toward the 2940/50 level would be fairly typical based on the pricing pattern unfolding.

The upside, while possibly breaking out, appears to be around the 3035 level for the week. If this level is breached, a run for 3050 is certainly possible. But given the over-bought nature of the market, it would take some pretty good earnings news to push things that quickly while we’re already at all-time highs.

Should a downdraft materialize, look for the 3000 level to be the first test. A breach of this level is not exactly a problem. It could just mean a test of the 50-day moving average, or somewhere down near 2900 is even possible. This does not negate the current up-trend. It would be a fairly orderly and typical round of profit taking to see this kind of price move. Should the 100-day moving average be pierced then it may be worth taking a closer look at pricing.

For the week, look for the bias to be positive, with some volatility increasing as earnings season gets under way. As long as expectations are met and guidance is reasonable, the 3100 level is still within sight in the next few weeks. If sentiment turns, we will re-evaluate at that time.

Meanwhile, the BigFoot database continues to be around 78% long. This should remain stable as long as volatility remains low.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Technical Warning Signs Continue to Grow

With the May pull-back in the markets, the technical landscape for the market has really deteriorated. Momentum is clearly to the downside, and stocks across most sectors and market caps have been falling. There have been very few safe ports in the storm so far.

One of the dangers of aggressive bear markets is the increase in correlation across investment categories. When massive systemic risk shows up (and markets are declining on a broad basis), diversification is a less effective risk management tool. This is a large part of the reason behind the BigFoot Marco Indicators – to give some tools to manage systemic risk.

So far, the BigFoot Macros have been hanging in there (translation: they’re still long). Note though, these indicators are lagging in nature. The technical landscape can still offer some perspective on the markets.

A quick look at both the market cap and sector proxies for the markets shows a lot of negative momentum (note the background color of the charts below – the red background indicates a negative pricing trend for the rolling 3-month trading period).

Market Capitalization Proxies
S&P500 Sector Proxies

The chart below shows key areas of potential support and resistance over the next few weeks. The downside momentum is significant, with the 2679/2661/2609 areas looking like support areas worth keeping an eye on.

For the week, trying to predict where this thing is headed is a challenge. The negative momentum is significant. However, the markets have been triggered by trade war concerns. So any meaningful positive developments on these fronts could drive a sharp reversal.

The ‘black swan’ probability is pretty high right now.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

The Trade Wars Begin

While it sounds like an episode from Star Wars, this may not be fantasy. The trade talks between the US and China appear to be breaking down. At this point, both sides are talking new tariffs. And the speculation about just how quickly the world will come to an end has begun.

Putting political commentary aside, what does this mean for investors?

In a word: it’s bad.

Futures are getting hammered as markets appear poised to drop about 2% across the board. The 10-year treasury yield has also dropped as people seek safe-haven assets. Even the BigFoot database has dropped from over 82% long to around 75% long. So this is becoming more than just a squawking media cycle.

Support may be tough to find in this market. There’s been such a steady climb the last month that there are very few ‘stops’ on the way back down. The first noteworthy area the markets reversed is the intra-day low set back on March 27th at 2787.

Here are key support levels from there: 200-day moving average is at 2776. 100-day moving average is at 2749. And then there’s the March 8th low of 2722.

All of these levels imply a drop of over 3% for the week.

The only silver lining to this situation is that it could end. Should a deal be reached, markets would now view this as a VERY positive event that could push things to all-time highs in short order. Otherwise, the upward momentum is shot. We’re now looking at a sideways pattern where the markets have to find their footing, re-test a few times, and see if they can grind higher.

So yes, this news is damaging. Unless something happens today that gives the market a hard reversal — something that has this market finishing in the green today (which, frankly, is hard to rationalize given the current data) — there’s likely more damage to come.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Technical Headwinds for SPX this Week

After a 7-day win streak the SPX may be bumping into some short-term resistance. We’re now spitting distance from SPX 2900, but the index is out ahead of most of its metrics at this point.

In fact, the SPX is more than 1.5 standard deviations above its 21-trading-day average. It’s above the 50, 100, and 200-day moving averages- and it’s above it’s 21-day linear regression.

In most of the traditional ways you’d analyze this market, it’s over-bought at this point. That makes for the high potential of short-term profit taking from traders and professional money managers.

The next thing to watch for on the horizon is Q2-earnings season. We’re running right into the throws of that now, with Alcoa reporting on April 17th. Those numbers should have a significant sway over the momentum of the SPX.

For the week, we may give a little back, with 2870’s to as low as 2830 being on the radar depending on the news cycle (the latter number being fairly extreme for a one-week move).

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.