Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street

$DIA, $SPY, $SOX, $QQQ, $RUTX, $XAU, $GLD, $RUTX, $VXX

FLASH: Last week we saw Wall Street stocks and Gold rally finishing a super June as the market climbed a wall of worries.

The stock market has rallied significantly over the past 6 months.

The Big Q: Is this Bull Run sustainable?

The stock market has rallied significantly over the past 6 months. Yet every single day we are bombarded with more things to “worry about.”

Macro worries, trade worries, yield curve worries +++

While there are certain pockets of weakness in the US economy, overall the economy is still growing and into it 121st month of expansion. Plus, various technical indicators remain Bullish on the stock market now.

What I have learned being in this game for over 40 years now, is that here is always something to “worry about.” When there is not something to worry about, people worry about how good thing are.

So, the Key is no worrying, and looking at the data.

  1. Fundamentals: no significant US macro deterioration, but the long term risk/reward does not favor Bulls long term.
  2. Technicals: mostly Bullish medium term.
  3. Technicals: mixed Bullish, Very Bullish near term.

The rally tends to continue over the next half year, although the rally’s pace does slow down. This is to be expected. It’s hard for the market to rally 17% every 6 months.

The Trend is Your Friend

The 2 most common and simple trend following strategies are:

  1. Buy when the S&P 500 is above its 200-Day MA.
  2. Buy when the S&P’s 50-Day MA is above its 200-Day MA or the Golden Cross.

Traders who use these trend following strategies are probably long right now, because both of these criteria are fulfilled.

We are in a Presidential election cycle, and until November Y 2020, and regardless of which party you like, it is another item that weighs on investor sentiment.

HeffX-LTN’s overall technical out look for the major US stock market indexes is Neutral, with our Key indicators flashing Very Bullish as of Friday, 21 June 2019.

Remember, it is your money so, your responsibility, pay attention.

The Bulls Vs The Bears

There is an old Wall Street adage: The market takes the stairs up and the elevator down. That’s just a colorful way of saying that the market tends to drop faster than it rises.

In this case the Bulls are on the escalator and the Bears are walking down the stairs.

Sentiment: The sentiment is pessimistic, which is rare considering that stocks are near all-time highs. A lot of investors are concerned about the trade dispute and pockets of economic weakness.

According to AAII sentiment data, there have been more Bears than Bulls for the 7th week running. Such 7 week streaks are quite bullish for the S&P 3 months later. The only 2 Bearish cases occurred in July and October 2008, when the economy was deep in a recession and the stock market had already collapsed. That is a very different environment from today.

The Bulls Vs The Bears 

Support and Resistance

SPY: Support/Resistance
Analysis: Bullish to Very Bullish
TypeValueConfluence
resist.302.151
resist.296.042
resist.294.722
supp290.528
supp287.544
supp285.127
supp282.772
supp281.345
supp278.872
supp276.592
supp274.572
supp272.434
supp266.462

The stock market and the economy move in the same direction in the long run, which is why we focus on macro data.

The US leading economic indicators are good now, which suggests that a recession is not in sight.

HeffX-LTN’s overall technical outlook for Wall Street’s major US stock market from the support and resistance perspective is Bullish to Very Bullish in here, as all of our Key indicators are now flashing Very Bullish

Have a terrific 4th of July Holiday week

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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