I always look forward to weekend charting and especially end of the month charting.
I love having a clear mind and a few days with of no new price action to analyze where we are at. So with Q1 2017 now in the books, I ran through a ton of charts this weekend. Before I get into my thoughts, here is a Twit of mine from March 9th. I honestly still feel the same 3 weeks later:
I will let my charts do the talking in this post since I have a lot.
The S&P and Dow Industrial have done well with their large cap exposure, but the relative strength of Mid Caps, Small Caps, Transports, High Beta, etc. has…sucked. Downtrends everywhere. High Beta relative to the S&P is also looking like a false breakout.
The Transports showed extreme relative strength back in October before any election. Thats disappeared. We are in a chop fest around 2015 highs here.
Small Caps were unstoppable in November, but have only fizzled out ever since. Look at the Russell 2000 on a weekly time frame, it never hit overbought…thats suspicious.
Financials are an important sector to the S&P as well as making up a large portion of the Russell. They don’t look so great right now. Also Goldman Sachs, the largest component of the Dow Industrial, is double topping at the 2007 highs. Not encouraging in the near term.
To me, it just feels like we are losing/lost momentum.
On the bright side, Tech is an absolute monster. I can’t deny it and won’t fight it.
How about this monthly chart?.. A beauty.
The chart below is from Andrew Thrasher. It does warrant some caution to the positives we have seen in Tech.
Another bright spot is the ratio of Stock’s to Bonds. We can’t be mad if we are above and continue to hold the 2007 highs here.
Do I think the market is going to crash? No. Could we correct 10-15% and be just fine? Yes and I feel that would be a great buying opportunity. I wouldn’t doubt for one second that a “Market in Turmoil” would air. Neutral and Bearishness has quickly jumped back up on sentiment indicators…over a one day drop that has mostly recovered by now.
So where does my portfolio stand? I’ve slimmed down holdings and own some puts, but am by no means in 100% cash. While I am always looking for great stocks, I am not adding anything here unless it really stands out to me.
We also could consolidate our way out of these divergences before heading higher as is the game lately. That would not surprise me.
I can’t stop seeing everywhere how April is the best month for the Dow Jones. I am not someone who takes this too seriously. The market is always changing. We have been doing the opposite of seasonal trends lately so I would not advise buying just because seasonality says so. Either way as we enter Q2, things surely are interesting out there.
Thanks for reading and have a good week.