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Thursday, March 14, 2019

Daily update 3/14 STA Weekly Report – Market Regains Confidence But Fundamentals Disagree

Pause day, but it looked like a little bit of distribution going on.

SPX never got going on the upside.  Breadth was -56%.  New highs dropped way down to 105.  That is not very inspiring since they were 175 yesterday.  New lows picked up a bit to 21.

The futures did not have much range today.  There is the possibility of a short term double top if the bulls don't come back in tomorrow.

The green count was up a bit, but remains below 50.  If the market turns down it would be easy to get a negative cross again.

The bulls are mulling over whether to chase price higher or not.  If they decide not to break out this market out there is the possibility we see the Dec. low again.  There have been so many attempts at this 2800-20 area in the last few months that I think another turn lower will cause a lot of profit taking.  I think it would have been more bullish longer term to have retested the Dec. low back in late Jan. or early Feb. then continue higher.  The way this rally unfolded the bulls have a lot riding on going higher now.  A failure could get ugly fast.  So we wait and see what happens.

Interesting snippet from STA Weekly Report – Market Regains Confidence But Fundamentals Disagree

Our investment process follows a three-pillar approach that combines research in macroeconomics, fundamentals & valuations, and technicals. Weakening fundamentals, rising valuations, and overheating technicals all argue against a further rally in the short-term. Therefore, we are not too surprised by the markets pullback last week. While not bearish, we remain cautious and guarded and encourage our readers to stick to a well-defined investment discipline and risk management process, rather than following “gut feelings” that could lead to return-chasing behavior.  


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