The stock market closed modestly higher last week for its fifth consecutive weekly gain, once again led by the defensive Dow Jones Industrial Average, up 2.3%. Although any positive weekly close is good, it’s important to note that the tech-heavy Nasdaq nand small-cap Russell 2000 showed the smallest gains and are the only major U.S. indices still in negative territory for 2016. #-ad_banner-# Since these indices typically lead in a healthy and sustainable market advance, I will continue to view the broader market rally with some skepticism until they start doing so. Every sector of the… Read More

The stock market closed modestly higher last week for its fifth consecutive weekly gain, once again led by the defensive Dow Jones Industrial Average, up 2.3%. Although any positive weekly close is good, it’s important to note that the tech-heavy Nasdaq nand small-cap Russell 2000 showed the smallest gains and are the only major U.S. indices still in negative territory for 2016. #-ad_banner-# Since these indices typically lead in a healthy and sustainable market advance, I will continue to view the broader market rally with some skepticism until they start doing so. Every sector of the S&P 500 finished in positive territory last week except for health care, which lost 2.6%.  In the March 7 Market Outlook, I pointed out that the biggest sector-related outflows over the previous one-week and one-month periods, according to Asbury Research’s proprietary metric, came from health care. This fueled the sector’s recent relative underperformance. As the table below shows, investors have continued to pull assets from health care for better perceived opportunities in other sectors. For instance, energy received the biggest inflows in the past one-week and one-month periods.   Health care has been the weakest sector… Read More

The U.S. stock market closed modestly higher last week, notching its fourth consecutive weekly gain. It was led by the defensive Dow Jones Industrial Average, which advanced 1.2%. The market was held in check by major overhead resistance levels in the Dow and S&P 500, which I will discuss in detail in a moment. #-ad_banner-# All sectors of the S&P 500 finished in positive territory last week, led by energy. As I pointed out in the previous report, Asbury Research’s metric showed energy has had the biggest sector-related inflow of investor assets over the past month, which fueled… Read More

The U.S. stock market closed modestly higher last week, notching its fourth consecutive weekly gain. It was led by the defensive Dow Jones Industrial Average, which advanced 1.2%. The market was held in check by major overhead resistance levels in the Dow and S&P 500, which I will discuss in detail in a moment. #-ad_banner-# All sectors of the S&P 500 finished in positive territory last week, led by energy. As I pointed out in the previous report, Asbury Research’s metric showed energy has had the biggest sector-related inflow of investor assets over the past month, which fueled its gains. Since its Jan. 20 low, the Energy Select Sector SPDR ETF (NYSE: XLE) is up 24.9%, outperforming the S&P 500 by 13.3 points. As long as investor assets continue to flow into energy, the recent strength is likely to continue. Market Tests Major Resistance But Leaning Higher In the Feb. 29 Market Outlook, I identified a bullish chart pattern in the Dow that targeted a move to 17,500. The index has since risen 3.5% into Friday’s 17,213 close, putting it just above formidable overhead resistance at 17,153 to 17,210. This resistance corresponds to significant resistance near 2,020 in the… Read More

The major U.S. indices politely responded to the title of last week’s Market Outlook, “Odds Favor a Continued Rally in Stocks,” with a broad-based advance. They were led by the small-cap Russell 2000, which gained 4.3%. #-ad_banner-#However, despite a nice rally over the past few weeks, the Russell 2000, S&P 500, Dow Jones Industrial Average and Nasdaq 100 remain down between 2% to 6% for the year. All sectors of the S&P 500 finished last week in positive territory, led by energy and financials, up 6.5% and 4.5%, respectively. Defensive health care brought up the rear, gaining just… Read More

The major U.S. indices politely responded to the title of last week’s Market Outlook, “Odds Favor a Continued Rally in Stocks,” with a broad-based advance. They were led by the small-cap Russell 2000, which gained 4.3%. #-ad_banner-#However, despite a nice rally over the past few weeks, the Russell 2000, S&P 500, Dow Jones Industrial Average and Nasdaq 100 remain down between 2% to 6% for the year. All sectors of the S&P 500 finished last week in positive territory, led by energy and financials, up 6.5% and 4.5%, respectively. Defensive health care brought up the rear, gaining just 0.2% last week.  Asbury Research’s own metric shows the biggest inflow of ETF-related investor assets went into financials in the past week and into energy in the past month. The biggest outflow of assets during both time periods came from health care. Market Testing Formidable Resistance Last week, I said the bullish chart pattern in the Dow Jones Industrial Average targeted a move to 17,500. The blue-chip index finished last week 2.8% below that objective. For that target to be met, though, the broader market, as represented by the S&P 500, must first break a formidable band… Read More

The major U.S. indices posted their second consecutive positive weekly close last week. They were led by the small-cap Russell 2000 and tech-heavy Nasdaq 100 indices, which gained 2.7% and 1.7%, respectively.  This is a positive near-term sign, as these indices typically lead the broader market higher and lower. Moreover, all sectors of the S&P 500 except for defensive utilities finished in the green last week. The best performers were materials, up 3.2%, and consumer discretionary, up 2.9%. #-ad_banner-# As I… Read More

The major U.S. indices posted their second consecutive positive weekly close last week. They were led by the small-cap Russell 2000 and tech-heavy Nasdaq 100 indices, which gained 2.7% and 1.7%, respectively.  This is a positive near-term sign, as these indices typically lead the broader market higher and lower. Moreover, all sectors of the S&P 500 except for defensive utilities finished in the green last week. The best performers were materials, up 3.2%, and consumer discretionary, up 2.9%. #-ad_banner-# As I said in last week’s Market Outlook, stocks are at a critical decision point from which the market’s next near-term move is likely to begin. Heading into this week, that move appears to be higher. A Near-Term Bottom Emerging? In last week’s report, I said a sustained rise above 1,947 in the S&P 500 would clear the way for a move to the 1,993 to 2,005 area. While the index is still negotiating this overhead resistance, others are starting to signal an emerging breakout.   On Friday, the Dow Jones Industrial Average closed above its 16,511 Feb. 1… Read More

All major U.S. indices closed in the green last week, led by the small-cap Russell 2000, up 3.9%, and the tech-heavy Nasdaq 100, up 3.6%.  One of the main characteristics of the market in 2016 has been see-sawing, directionless trading with huge intraday swings. This is a relatively recent phenomenon, as seen in the chart below. The average daily trading range of the benchmark S&P 500 since the beginning of the year is 37.2 points. That is 54% higher than 2015’s average daily trading range and more than double what it was in 2010. This spike… Read More

All major U.S. indices closed in the green last week, led by the small-cap Russell 2000, up 3.9%, and the tech-heavy Nasdaq 100, up 3.6%.  One of the main characteristics of the market in 2016 has been see-sawing, directionless trading with huge intraday swings. This is a relatively recent phenomenon, as seen in the chart below. The average daily trading range of the benchmark S&P 500 since the beginning of the year is 37.2 points. That is 54% higher than 2015’s average daily trading range and more than double what it was in 2010. This spike in the daily trading range, which many attribute to the combination of lower volume and an increase in high frequency trading, has made it more difficult to determine the underlying trend of the market — but it’s still possible. In this week’s Market Outlook, we will take a closer look at some metrics that can help us determine the market’s near- and intermediate-term direction. #-ad_banner-# All sectors of the S&P 500 posted gains last week, led by real estate and consumer discretionary. Defensive utilities and consumer staples, which ironically are the only sectors in positive territory year to… Read More

Despite a strong rebound on Friday, the major U.S. indices closed lower again last week. Leading the way down were the small-cap Russell 2000 and blue-chip Dow Jones Industrial Average, which each lost 1.4% for the week. #-ad_banner-# The week’s most important technical event was the S&P 500’s ability to once again test and hold major support at 1,821, triggering a rebound Friday. I identified this level in the Jan. 19 Market Outlook as being critical to the market’s intermediate-term direction.  As I said last week, this “is where the S&P 500 should stabilize and begin an eventual… Read More

Despite a strong rebound on Friday, the major U.S. indices closed lower again last week. Leading the way down were the small-cap Russell 2000 and blue-chip Dow Jones Industrial Average, which each lost 1.4% for the week. #-ad_banner-# The week’s most important technical event was the S&P 500’s ability to once again test and hold major support at 1,821, triggering a rebound Friday. I identified this level in the Jan. 19 Market Outlook as being critical to the market’s intermediate-term direction.  As I said last week, this “is where the S&P 500 should stabilize and begin an eventual retest of the May 2015 highs… if the recent decline was just a correction within a healthy bull market. If the market cannot stabilize at this level, it warns equities are in the midst of an emerging bear market.” The only sector of the S&P 500 to post a gain last week was consumer staples, which rose just 0.9%. Financials and utilities were among the weakest sectors, each down 2.2%.  Not surprisingly, Asbury Research’s own metric shows the biggest outflows from sector bet-related ETFs over the past one-week, one-month and three-month periods came from financials. This fueled last… Read More

The major U.S. indices closed sharply lower last week, following a sharp-but-short-lived, two-week broader market rally. #-ad_banner-#Last week’s sell-off was led by the tech-heavy Nasdaq 100, off 6%, and small-cap Russell 2000, down 4.8%. This weakness could be especially problematic since high-beta technology stocks and small caps typically lead the broader market higher and lower. The only sectors to post meaningful gains were materials, boosted by a strong rebound in gold prices, which I will discuss in more detail in this report, and defensive utilities.  The table below shows that, according to Asbury Research’s own metric, the biggest inflow into… Read More

The major U.S. indices closed sharply lower last week, following a sharp-but-short-lived, two-week broader market rally. #-ad_banner-#Last week’s sell-off was led by the tech-heavy Nasdaq 100, off 6%, and small-cap Russell 2000, down 4.8%. This weakness could be especially problematic since high-beta technology stocks and small caps typically lead the broader market higher and lower. The only sectors to post meaningful gains were materials, boosted by a strong rebound in gold prices, which I will discuss in more detail in this report, and defensive utilities.  The table below shows that, according to Asbury Research’s own metric, the biggest inflow into sector bet-related ETFs over the past one-week, one-month and three-months periods went to utilities, fueling last week’s strength in that sector. As long as these positive inflows continue, utilities are likely to remain strong and continue outperforming. Market At Important Crossroad Since I warned traders in the Dec. 14 Market Outlook that it was time to adopt defensive strategies to protect assets in the short term, the S&P 500 lost 6.6% through Friday’s close. The decline resulted in a test of important support at 1,821 on Jan. 20, a level I identified in the Jan. 19 report. After… Read More

The major U.S. indices closed higher last week, adding to the previous week’s gains. The rebound was led by the blue-chip Dow Jones Industrial Average, which climbed 2.3%. The tech-heavy Nasdaq 100 — which typically leads the market both higher and lower — brought up the rear with gains of just 0.5%. #-ad_banner-# From a sector standpoint, last week’s advance was led by downtrodden energy. The sector is closely tied to crude oil prices and gained 4.4% on the hopes that oil supply is set to decrease. The next strongest sectors were both defensive, though, with utilities and… Read More

The major U.S. indices closed higher last week, adding to the previous week’s gains. The rebound was led by the blue-chip Dow Jones Industrial Average, which climbed 2.3%. The tech-heavy Nasdaq 100 — which typically leads the market both higher and lower — brought up the rear with gains of just 0.5%. #-ad_banner-# From a sector standpoint, last week’s advance was led by downtrodden energy. The sector is closely tied to crude oil prices and gained 4.4% on the hopes that oil supply is set to decrease. The next strongest sectors were both defensive, though, with utilities and consumer staples gaining 3.7% and 3% respectively. It’s too early to fully assess the sustainability of this rally, but this lack of leadership doesn’t instill much confidence that it’s more than a mere correction in an uncompleted market decline. More clues to the sustainability of the current rebound can be found by watching which areas of the market lead and lag in weeks ahead. Important Resistance Is On The Horizon  The bellwether S&P 500 has aggressively rebounded from its test of underlying support at 1,821 — a level I first discussed in the Jan. 19 Market Outlook. The chart below… Read More

The major U.S. indices overcame early weakness last week to post across-the-board gains. The advance was led by the tech-heavy Nasdaq 100, which gained 2.9%, although the market-leading index is still down 7.3% for 2016. The rebound followed a successful test of underlying support at 1,821 in the benchmark S&P 500, which I discussed in last week’s Market Outlook. This is an important intermediate-term decision point for the broader market. From here a new one- or two-quarter advance should begin if the current decline is just a correction within a larger bull market. But I am not yet… Read More

The major U.S. indices overcame early weakness last week to post across-the-board gains. The advance was led by the tech-heavy Nasdaq 100, which gained 2.9%, although the market-leading index is still down 7.3% for 2016. The rebound followed a successful test of underlying support at 1,821 in the benchmark S&P 500, which I discussed in last week’s Market Outlook. This is an important intermediate-term decision point for the broader market. From here a new one- or two-quarter advance should begin if the current decline is just a correction within a larger bull market. But I am not yet convinced this is the case. #-ad_banner-# From a sector standpoint, last week’s rally was led by technology, which gained 2.6%. However, a look under the hood via Asbury Research’s investor asset flows-based metric shows the percentage of sector bet-related assets being invested in technology has actually been contracting since December. So, unless this quickly changes to a trend of expansion, the recent sector outperformance is likely to be short lived. Keep Support Must Hold Or Watch Out Below The chart below shows the S&P 500 testing and holding underlying support at 1,821 on Wednesday. It then rebounded… Read More

The carnage on Wall Street continued last week. Stocks finished sharply lower, led by the small-cap Russell 2000, which lost 3.7% to end Friday down 11.3% for the year. Of the major indices, the S&P 500 shows the smallest year-to-date loss, off 8%. While there are a few reasons to believe the market may be approaching a meaningful bottom, I unfortunately do not see any tangible evidence suggesting one is in place. Until that happens, I will remain on the defensive. #-ad_banner-# From a sector standpoint, last week’s market weakness was led by materials, which lost… Read More

The carnage on Wall Street continued last week. Stocks finished sharply lower, led by the small-cap Russell 2000, which lost 3.7% to end Friday down 11.3% for the year. Of the major indices, the S&P 500 shows the smallest year-to-date loss, off 8%. While there are a few reasons to believe the market may be approaching a meaningful bottom, I unfortunately do not see any tangible evidence suggesting one is in place. Until that happens, I will remain on the defensive. #-ad_banner-# From a sector standpoint, last week’s market weakness was led by materials, which lost 4.5% compared to the S&P 500’s 2.2% decline.  The only sector of the S&P 500 to finish in positive territory for the week was defensive utilities, which gained 0.7%. As I’ve mentioned, the recent decline in long-term interest rates — which has been driven by a strong shift in investor assets back into the relative safety of U.S. Treasuries — has drawn yield-seeking investors back into riskier but better paying utilities. Retail Remains Vulnerable In last week’s Market Outlook, I said my work targeted a drop in the SPDR S&P Retail ETF (NYSE: XRT) to $40, and that its positive… Read More