Sacagawea lived from May 1788 to December 1812. She was a Lemhi Shoshone woman who is best known for her help guiding the Lewis and Clark Expedition in achieving their mission objectives by exploring thousands of miles from North Dakota to the Pacific Ocean. She helped establish cultural contacts with the Native American populations in addition to her contributions to natural history. She was inducted into the National Women’s Hall of Fame in 2003.
So Sacagawea guided folks through “dangerous waters.” Similarly, that’s kind of how I feel in that I attempt to “guide” folks, not necessarily through “dangerous waters,” but certainly through some difficult times. Obviously if you make a call sometimes you get it wrong, but as often stated, “When you are wrong you say you are wrong quickly for a de mimimis loss of capital.” Most recently, my indicators had been “long” from said December “lows,” actually looked for an “energy peak” in mid-February and for a small pullback from there. That energy peak never showed up and I adjusted my strategy accordingly looking for higher prices. I still feel that way. Indeed, last year that guiding task was pretty difficult, but since the October 2, 2018 “sell signal,” and the subsequent selling climax low in late December, the guiding task has been fairly simple.
Last week the S&P 500 (SPX/2803.69) gained 0.39% and has now traveled into the 2800 – 2820 overhead resistance zone. Participants will now focus on the November 7, 2019 intraday reaction high of 2800.18, as well as the December 3, 2018 intraday reaction high of 2815.15. Just as they didn’t think the SPX would trade above its 50-day moving average (DMA currently at 2749.63), or its 200-DMA (now at 2649.63), we think the December high will eventually be eclipsed just like the November high “fell” last week. Pointing the way higher, the S&P Mid-Cap Index bettered its 200-DMA, as well as its December 3, and November 7, 2018 recovery highs.
On the negative side it is worth noting, however, that the SPX is ~2% above its 200-DMA and 6.1% above its 50-DMA. Also noteworthy is that Upside Volume has been falling, new highs over new lows has also been falling, and the stock market remains overbought on a short-term basis. On the positive side, the Volatility Index (VIX/13.57) has fallen noticeably. Yet the most bullish indicator out there is the Advance-Decline Line, which traded to new all-time highs last week. As the brainy Leon Tuey writes (as paraphrased):
They keep babbling about the S&P 500 index, not knowing the difference between an Index and “the market.” They obviously don’t understand the market’s logic. . . . It is not the indices that are the markets. The Advance-Decline is “The” market and it has traded out to a new all-time high.