Not much has changed for the U.S. markets when viewed on an intermediate-term basis. We did highlight a short-term buy in the S&P last week based on the daily timeframe and that buy remains in effect. Momentum for the Nasdaq Composite remains very weak and we would continue to use any strength to lighten up on Tech. Defensive areas such as Utilities are holding up very well and we had U.S.REITs as viewed by the IYR trigger a buy this week. We are working on a complete sector review for later this week.
The U.S. indices had a good bounce last week, but not enough to change the overall outlook which remains cautious. The S&P 500 had a 5% rally off the MFU-4 target based on the daily timeframe, but all it has really done is to rally into a zone of resistance. The intermediate-term momentum measures remain weak. We continue to see more weakness in Growth relative to Value.
Of particular note is the negative money flow units that are underway for the U.S. market. Most of the downside targets are coming in at -15% to - 20% from this years highs. The European markets remain very weak as does the Hang Seng and China. The Nikkei has developed a negative money flow unit this week.
The S&P 500, Nasdaq Composite, Russell 2000, MDY and Dow Transports have all reversed from areas of support. Ideally, we would like to see any pullback create a higher low which would setup a bullish move higher into year end.
This is a chart used in prior Technical Tuesday reports and updated here with current thoughts. If price were to achieve the downside target at $36.50, this would be a -28% decline from the January high. The decline from the 2014 high to the 2016 low was -32%. We strongly feel there is more downside and would avoid trying to pick a bottom at this point.
Momentum has weakened considerably for the Nasdaq Composite, Russell 2000 and teh Mid-Cap index, (MDY). Each of these indices are at their intermediate to long-term channel support areas. The S&P 500 has held up much better.
Current thoughts on Crude, the (XLE) - Energy Select SPDR and the (IXC) - iShares Global Energy ETFs are below. Crude continues to look bullish, but most of the energy stocks need more work to get going.
In this report, we are reviewing Global Industrials which we highlighted last week in our Technical Tuesday report as a sector which has been improving in our model score in recent months. We have ranked and reviewed the components of the of both the Industrial Select Sector SPDR (XLI) and the iShares Global Industrials ETF (EXI) from which we have 30 U.S and 26 Non-U.S. long ideas.