THE MARKET MOOD
The GO Signal should last for at least another 7 weeks, even though short-term weakness, or at least sluggishness, will continue for the major indexes through the month of April. That means there will likely be some good buying opportunities as prices drift lower before beginning a stronger upward run somewhere between the end of April and the middle of May.
The Utility sector has begun the month of April by outperforming the S&P 500, but this is just for the first week so it is hard to say whether it will continue. Since volatility has not strongly increased, it is likely that this pattern will reverse, thus setting up a good buy in other areas.
We remain in a “GO” signal. So far, this month, the SPY is using its 50-day simple moving average as a “tightwire.” The index is balancing just atop this line, after dipping below it intraday on March 27, but then bouncing to close above it.
We head into 1Q earning’s season this week of April 10, with major banks such as JPM, C, PNC and WFC announcing earnings on Thursday.
The SPY remains above its 12-month SMA (monthly chart) and its 14-week SMA (weekly chart). The index is overbought, especially on the monthly chart.
Although, we remain in a GO signal, I will be keeping an eye on the IWM, as this ETF and the Russell 2000 it represents, can act as a leading indicator for the broad market. It currently trades below its 50-day SMA.
Should the IWM fall below nearby key support at $133.00, I will become more cautious, and monitor our STOP parameters carefully.
Keep green on your screen!