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.
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.
Although the uptrend in the Nasdaq Composite and Russell 2000 remains intact, both indices have stalled at the upper end of their intermediate-term channel. The Dow Transports continue to find resistance in the 10900 area and look poised to pullback short-term.