All major U.S. stock indices finished slightly higher last week except for the tech-heavy Nasdaq 100, which lost 0.4%, posting its second consecutive negative weekly close. As I have been stating for the past month, relative outperformance by technology is necessary to drive the broader market higher. If this recent weakness continues, it is likely to trigger a correction. From a sector standpoint, last week’s modest advance was led by defensive utilities and consumer staples, which gained 2.1% and 1.5%, respectively. However, my own ETF-based metric shows that the biggest contraction in sector bet-related assets over… Read More

All major U.S. stock indices finished slightly higher last week except for the tech-heavy Nasdaq 100, which lost 0.4%, posting its second consecutive negative weekly close. As I have been stating for the past month, relative outperformance by technology is necessary to drive the broader market higher. If this recent weakness continues, it is likely to trigger a correction. From a sector standpoint, last week’s modest advance was led by defensive utilities and consumer staples, which gained 2.1% and 1.5%, respectively. However, my own ETF-based metric shows that the biggest contraction in sector bet-related assets over the past one-week and one-month periods actually came from consumer staples. This suggests that last week’s strength in the sector is likely to be short lived and may lead to some outright weakness and relative underperformance versus the S&P 500 later this quarter. #-ad_banner-# Technology: Contracting Investor Assets a Red Flag In last week’s Market Outlook, I pointed out that the Nasdaq 100 was testing underlying support at its October uptrend line, which I identified as a critical inflection… Read More

All major U.S. stock indices finished in the red last week, led lower by the tech-heavy Nasdaq 100, which lost 2.8%. Throughout the past month, I have been saying that as long as technology continued to outperform, the overall market was likely to continue grinding higher. Accordingly, I view last week’s relative weakness by the Nasdaq 100 as an early warning of potential weakness in April. All sectors of the S&P 500 fell last week, with financials, technology and industrials hit hardest. The energy sector held up relatively well. Read More

All major U.S. stock indices finished in the red last week, led lower by the tech-heavy Nasdaq 100, which lost 2.8%. Throughout the past month, I have been saying that as long as technology continued to outperform, the overall market was likely to continue grinding higher. Accordingly, I view last week’s relative weakness by the Nasdaq 100 as an early warning of potential weakness in April. All sectors of the S&P 500 fell last week, with financials, technology and industrials hit hardest. The energy sector held up relatively well. #-ad_banner-# My own asset-flow-based metric continues to indicate that this beleaguered sector is historically under-invested. This suggests an emerging opportunity to overweight the sector in upcoming months and look for buying opportunities in undervalued energy assets. Dow Theory Non-Confirmation Remains in Force In the March 2 Market Outlook, I pointed out that the new closing high in the Dow Jones Industrial Average on Feb. 20 had not yet been confirmed by a corresponding new closing high in the Dow Jones Transportation Average. I said… Read More

#-ad_banner-#​Two weeks ago, I said that as long as technology and small-cap issues continued to outperform, I viewed the broader market’s recent weakness as a temporary countertrend correction rather than a sustainable decline. My expectations materialized last week as all major U.S. stock indices closed sharply higher, led once again by the tech-heavy Nasdaq 100 and small cap Russell 2000. Both are now up more than 5% for the year.  Last week’s rally was triggered by the Federal Reserve’s March 18 statement and Chair Janet Yellen’s subsequent comments, which were collectively… Read More

#-ad_banner-#​Two weeks ago, I said that as long as technology and small-cap issues continued to outperform, I viewed the broader market’s recent weakness as a temporary countertrend correction rather than a sustainable decline. My expectations materialized last week as all major U.S. stock indices closed sharply higher, led once again by the tech-heavy Nasdaq 100 and small cap Russell 2000. Both are now up more than 5% for the year.  Last week’s rally was triggered by the Federal Reserve’s March 18 statement and Chair Janet Yellen’s subsequent comments, which were collectively viewed as being dovish and likely to postpone the inevitable rise in U.S. interest rates to later this year.  Adding fuel to the fire was the fact that investors were bearishly over-committed headed into the meeting, according to the elevated extreme in the CBOE Put/Call Ratio that I pointed out in in the previous Market Outlook. This increased the initial buying pressure on Wednesday as these bearish investors scrambled to readjust their portfolios.  The strong rebound was led by the defensive health care and utilities sectors and pushed all major U.S. indices back into positive territory for the year.  New… Read More

All major U.S. stock indices closed lower last week with the exception of the small-cap Russell 2000, which gained 1.2%. Recent market weakness has left the Russell and tech-heavy Nasdaq 100 as the only two in positive territory for 2015. This is actually a subtle positive for the overall market heading into the second quarter, because technology and small-cap issues typically lead. As I said last week: “As long as technology and small-cap issues continue to outperform the broader market, as has been the case thus far this year, I view the recent weakness as a temporary countertrend correction rather… Read More

All major U.S. stock indices closed lower last week with the exception of the small-cap Russell 2000, which gained 1.2%. Recent market weakness has left the Russell and tech-heavy Nasdaq 100 as the only two in positive territory for 2015. This is actually a subtle positive for the overall market heading into the second quarter, because technology and small-cap issues typically lead. As I said last week: “As long as technology and small-cap issues continue to outperform the broader market, as has been the case thus far this year, I view the recent weakness as a temporary countertrend correction rather than a sustainable decline.” #-ad_banner-#From a sector standpoint, only health care and financials posted gains last week. Two of the weakest sectors were energy and materials, both of which have been adversely affected by recent strength in the U.S. dollar. It appears that the greenback has been influencing a lot more than just these two sectors though. My work shows that the currency is currently inversely correlated to a number of commodity prices, including crude oil, copper and the CRB Index, and positively correlated to the U.S. stock market. Influential U.S. Dollar at a Critical Level This week’s first chart… Read More

All major U.S. stock indices closed lower for the second consecutive week, led by the broad market S&P 500, which lost 1.6%.  #-ad_banner-#Despite the recent decline, all major indices remain in positive territory for 2015, led by the tech-heavy Nasdaq 100, which is up 3.9%. As long as technology and small-cap issues continue to outperform the broader market, as has been the case thus far this year, I view the recent weakness as a temporary countertrend correction rather than a sustainable decline. Ironically, Friday’s market collapse was triggered by perhaps the… Read More

All major U.S. stock indices closed lower for the second consecutive week, led by the broad market S&P 500, which lost 1.6%.  #-ad_banner-#Despite the recent decline, all major indices remain in positive territory for 2015, led by the tech-heavy Nasdaq 100, which is up 3.9%. As long as technology and small-cap issues continue to outperform the broader market, as has been the case thus far this year, I view the recent weakness as a temporary countertrend correction rather than a sustainable decline. Ironically, Friday’s market collapse was triggered by perhaps the best economic news so far this year. The U.S. economy added 295,000 jobs in February as the unemployment rate declined to 5.5%. On an annual basis, this is the best period of job gains in nearly 15 years.  But a quantitative easing-inspired mindset had traders thinking that good economic news is bad news for U.S. stocks because it will encourage the Federal Reserve to raise interest rates sooner rather than later this year.  I view this as a temporary reaction that should eventually provide a better intermediate-term buying opportunity. At the end of the day, rising… Read More

All major U.S. stock indices closed lower last week following three weeks of higher closes, except for the small-cap Russell 2000, which was up just 0.1%. Despite last week’s setback, the major indices are still in the black for 2015 and are being led by the tech-heavy Nasdaq 100 and Russell 2000, up 4.8% and 2.4% respectively. These indices typically lead the market higher during healthy bullish trends. The two strongest sectors last week were consumer staples and consumer discretionary, the latter of which saw the largest weekly increase in sector bet-related investor assets according to… Read More

All major U.S. stock indices closed lower last week following three weeks of higher closes, except for the small-cap Russell 2000, which was up just 0.1%. Despite last week’s setback, the major indices are still in the black for 2015 and are being led by the tech-heavy Nasdaq 100 and Russell 2000, up 4.8% and 2.4% respectively. These indices typically lead the market higher during healthy bullish trends. The two strongest sectors last week were consumer staples and consumer discretionary, the latter of which saw the largest weekly increase in sector bet-related investor assets according to my own ETF-based metric. #-ad_banner-#​The Consumer Discretionary Select Sector SPDR ETF (NYSE: XLY) has outperformed the S&P 500 SPDR ETF (NYSE: SPY) by 3.3% since I identified positive asset flows in the sector on Jan. 5, and has outperformed by 4.9% since I first identified consumer discretionary as a potential buying opportunity in the Dec. 8 Market Outlook. Seasonality Supports Recent Market Strength In last week’s report, I discussed an emerging breakout from… Read More

All major U.S. indices closed higher for the third consecutive week, led by the tech-heavy Nasdaq 100, which gained 1.4% and is now up 4.9% for the year. As I’ve stated in previous reports, this is particularly important because technology issues, ideally with some help from small-cap stocks, typically lead the broader market both higher and lower. #-ad_banner-#From a sector standpoint, last week’s rally was led by health care and industrials, with the recently rejuvenated energy sector the only one in negative territory. Meanwhile, materials, which were extremely weak during the fourth quarter, have quietly been the strongest sector year… Read More

All major U.S. indices closed higher for the third consecutive week, led by the tech-heavy Nasdaq 100, which gained 1.4% and is now up 4.9% for the year. As I’ve stated in previous reports, this is particularly important because technology issues, ideally with some help from small-cap stocks, typically lead the broader market both higher and lower. #-ad_banner-#From a sector standpoint, last week’s rally was led by health care and industrials, with the recently rejuvenated energy sector the only one in negative territory. Meanwhile, materials, which were extremely weak during the fourth quarter, have quietly been the strongest sector year to date, up 6.9%. This suggests the opportunity I pointed to in copper futures and PowerShares DB Base Metals ETF (NYSE: DBB) in the Dec. 8 Market Outlook could begin to get some traction in the marketplace. I continue to watch the materials sector and copper as emerging investment opportunities in 2015. Cisco Leading Technology Higher In the previous report, I highlighted an emerging breakout in the Nasdaq 100 following 10 weeks of investor indecision that targeted a 5% rise to 4,600. In the past week alone, the index gained 1.4% to… Read More

All major U.S. indices closed up for the second consecutive week, led by the tech-heavy Nasdaq 100, which gained 3.7%. This puts them all back into positive territory for 2015.  #-ad_banner-#Since late last year, I have been saying that leadership by technology was necessary to propel the broader market to new highs. It looks like we are finally starting to see that. Tech was the strongest sector of the S&P 500 last week, gaining 3.8%.  Energy also made an impressive showing, advancing 2.8%. It has actually outperformed the S&P 500 by 5 basis points since the Jan. 19 Market Outlook,… Read More

All major U.S. indices closed up for the second consecutive week, led by the tech-heavy Nasdaq 100, which gained 3.7%. This puts them all back into positive territory for 2015.  #-ad_banner-#Since late last year, I have been saying that leadership by technology was necessary to propel the broader market to new highs. It looks like we are finally starting to see that. Tech was the strongest sector of the S&P 500 last week, gaining 3.8%.  Energy also made an impressive showing, advancing 2.8%. It has actually outperformed the S&P 500 by 5 basis points since the Jan. 19 Market Outlook, when my ETF-based metric showed energy had the biggest one-week inflow of investor assets. At the time, I said this suggested an “emerging buying opportunity in this unloved and washed-out sector.” Moreover, the latest data shows that, through the end of last week, the biggest increase in sector bet-related investor assets over the past one-month and three-month periods was into energy, which should support further strength in the sector. Tech Leadership is a Good Sign for the Bulls In the Jan. 12 Market Outlook, I pointed out that the sideways price activity in the Nasdaq 100… Read More

All major U.S. indices closed in positive territory last week, reversing the previous week’s negative closes, led by the Dow Jones Industrial Average, which gained 3.8%. This good one-week showing was enough to nudge the industrials into positive territory for 2015; the index is up just over one point year-to-date, for a return of 0.01%. All other major indices are still in negative territory for 2015, except for the small-cap Russell 2000, which is now up 0.1%. I’ll discuss this market-leading index in more detail later in today’s report. #-ad_banner-#​Back in the Jan. 19 Market Outlook,… Read More

All major U.S. indices closed in positive territory last week, reversing the previous week’s negative closes, led by the Dow Jones Industrial Average, which gained 3.8%. This good one-week showing was enough to nudge the industrials into positive territory for 2015; the index is up just over one point year-to-date, for a return of 0.01%. All other major indices are still in negative territory for 2015, except for the small-cap Russell 2000, which is now up 0.1%. I’ll discuss this market-leading index in more detail later in today’s report. #-ad_banner-#​Back in the Jan. 19 Market Outlook, I pointed out that my own ETF-based metric showed the biggest one-week inflow of investor assets was into energy, and that, should this expansion in assets continue, it would “suggest an emerging buying opportunity in this unloved and washed-out sector.” This expansion of assets into energy has indeed continued, as my metric now shows that the biggest inflow of sector bet-related assets over the past one-week, three-week and three-month periods have all been into that sector. Meanwhile, the Energy Select Sector SPDR ETF (NYSE: XLE) has already outperformed the SPDR S&P 500 ETF (NYSE: SPY) by 4.2 percentage points since… Read More

All major U.S. indices closed in positive territory last week, led by the tech-heavy Nasdaq 100, which gained 3.3%. However, all others remain in negative territory for 2015 as stocks continue to drift sideways.  Although this recent sideways movement tends to lull investors to sleep, it is important and worth keeping a close eye on because it represents the probable springboard for the market’s next multi-month trend. #-ad_banner-#​All S&P 500 sectors posted gains last week, led by technology, industrials and energy. The recent strength in technology bodes well for an eventual bullish resolution to the current sideways market… Read More

All major U.S. indices closed in positive territory last week, led by the tech-heavy Nasdaq 100, which gained 3.3%. However, all others remain in negative territory for 2015 as stocks continue to drift sideways.  Although this recent sideways movement tends to lull investors to sleep, it is important and worth keeping a close eye on because it represents the probable springboard for the market’s next multi-month trend. #-ad_banner-#​All S&P 500 sectors posted gains last week, led by technology, industrials and energy. The recent strength in technology bodes well for an eventual bullish resolution to the current sideways market activity as this sector tends to lead the broad market both higher and lower.   My own ETF-based asset flow metric shows that investor assets are slowly moving back into energy, suggesting that a new investment opportunity is emerging in this beleaguered sector. This metric also indicates that the materials sector is historically under-invested, which may lead to a buying opportunity later this year. Market Leaning Toward a Bullish Resolution One clue as to how the market will resolve its December-January malaise may be found in Dow Theory. The chart below shows the January decline to a… Read More