Global Markets Trends Feb 15, 2019

Global Markets Trends February 15, 2019

Some upcoming changes:

  1. On legal advice and for liability reasons, I will be moving these reports to a new web site I have set up.
  2. Starting next week, these reports will be coming from reports@deckresearch.com You may want to white list the email address, otherwise the reports could end up in your junk folder.
  3. While it may be a day or later, the reports will be posted on deckresearch.com

Global Market Trends Week Ending Feb 15, 2019

  1. Review of global markets starting with the US.
  2. US Markets: Melt Up or Melt Down?
  3. Performance chart of world markets.
  4. Chart of China Large-Cap (FXI).
  5. Performance chart of major US market sectors.
  6. Chart of Technology Sector and Russel 2000 (bell weather sector and market index to watch).
  7. Summary.

Overview To Date: The US and most of the world markets have continued to rally from the  December 2018 lows. The action over the last two weeks has been mixed. Strength in some markets and weakness in others. Overall most markets were up for the week. After the strong rally since De. 24th, some kind of pullback or correction would be expected. So far it has been more of a rolling, even sideways correction.

The summary chart below shows strength across the world markets. Eight of the ten indexes intermediate-term trend are up by closing above their 200-day moving average (PPO200). The VT – World Market Fund is back in an uptrend.

US Markets: Melt Up or Melt Down? One well-known forecaster is projecting a strong bull market in 2019 he is calling a “Melt-Up”.  Another prominent long term analysis is projecting  a major “Melt Down”,  a substantial bear market. As I have mentioned in these reports, the market internals since Dec. 24th project at least an intermediate uptrend in 2019. Last week a chart was publishing supporting “Melt Down”. The problem with charts is they can be interpreted in multiple ways. Chart patterns are indicative of possible action, not always predictive. Chart A below is a daily of the Dow Industrials. It shows “Declining Wedge Pattern” often indicative of a bear market downtrend. The commentary with the chart was a major down move to at least 19300. No sooner had the analyst published the chart and commentary, the Dow rally continued right past ‘D’ on their chart. Just to show an alternative chart interpretation, I put together Chart B.  An inverse “Head and Shoulder” pattern can be identified. Strong market internals since Dec. 24 support this pattern. There is a Left-Shoulder, a Head and the makings of a Right-Shoulder. You would expect some kind of minor correction or selloff as part of the ‘Right Shoulder’ in the pattern. Instead, the market has kept grinding its way up. A market projection with this pattern indicates a potential rally to 28000 to 30000 on the Dow.

Performance comparison of the major world markets to SP500: Markets worldwide along with the US markets were up for the week after showing some weakness the previous week.

China market index (FXI) Bellwether Market.  There was continued talk last week about the China/US trade talks, and the strength of the China economy. Some bounce in the China index (FXI).  The index stayed about 42, and the 200-Day Moving Average. The China economy has a big impact on the world economy. A break in the China index would signal concern over the China economy.  

Relative Performance US market sectors: Since the December lows, the US market sectors have rallied. Last week all elven sectors were up.   After being down last week the energy sector was up (5.05%) with the bonce in oil prices.

Technology EFT – XLK Bellwether Sector and the Russel 2000. Investors are moving money into technology and small-cap stocks. In the chart below Technology EFT (XLK) continued strong. The Russel 2000 Small Cap index also has been stronger over the last two weeks. This is another sign investors are moving into more “risky” investments.  Also, it is worth noting how the Russel 2000 was weaker over the 2018 summer before the broader market high in October. This was one of the early signals of the coming correction.

Summary: Since the December 24th low, the strong rally has continued. The market strength has been confirmed by market internals not seen since the low in 2016. Short of a major derailment, there is a good chance of a continuation in 2019 of the secular bull market started in 2009. 

This is an aging bull market and it will continue to be a difficult trading and investment environment. All it takes is a wrong statement on trade, the economy or from the Federal Reserve to send the markets into another selloff.

Short of a major derailment, the US and various world markets have moved or are moving from ‘risk off’ to ‘risk on’ for investors.

Good investment opportunities continue to develop as the US and world market rally. These are active investors or traders markets.

Note: the above are not trade recommendations, but possibilities to watch. The market is volatile and can swing sharply.

Posted in Global Markets Trends.