MON Sector Strength – TUE Rates – WED Medium-Term – THU Commodities Currencies – FRI Sentiment – SAT Longer-Term

The Longer-Term Outlook

I am feeling very negative towards the stock market again, so it is good therapy for me to start with the most bullish chart to even out my mood. This chart below is clearly bullish, and I don’t see any way to be a bear with a chart of the cumulative advance/declines that looks like this.

More people are beginning to talk about the weakness in this group of stocks. In fairness, this chart is neutral at the moment, in my opinion. It could be a base building pattern, so we won’t know until the pattern breaks up or down. In other words, it isn’t a head and shoulders until it breaks down.

I am seeing potential head and shoulders in a lot of charts. Are these patterns real or is it an illusion caused by my negativity?  

This is the most bearish of the charts I review. The market participation looked like it was finally starting to improve last week. Now it is weakening again. This is quite a negative divergence, and it has lasted for quite a while. However, the market has proven that it can move higher despite weakness in a large percentage of stocks…and despite my protests.

The ECRI index didn’t change from last week, and now M2 growth is showing tiny signs of turning up. What to think? The ECRI index is clearly weak, but will it continue to weaken or start to turn higher?  

We’ve seen this so many times over the years where low readings for this index make the economy look vulnerable only to see the index start to strengthen… October 2017 for instance. I think the small caps are key. As long as they hold above this trend, then the ECRI index is a caution sign rather than a signal to sell.

The Silver/Gold ratio is below where it was at its worst in 2008. I just can’t believe there is inflation with this chart looking so weak. I think this chart is saying that we’ll see higher short-term rates despite very low levels of inflation. I don’t have any other explanation.