Phases & Cycles Market Outlook – March 14, 2022
They say that a picture is worth a thousand words! Let’s look at some of them.
The upper line in each picture shows the S&P 500 Index (SPX) from January 2016 to-date and its Moving Average (dashed blue line). The three letters (A, B, C) indicate the end of previous corrective periods. The letter D points to the status of the current decline.
Note that the SPX declines below its Moving Average at each letter.
The lower line in the chart below shows the percentage of stocks that are above their 30-week Moving Averages (30wMA). Above 70% indicates Over-bot and below 30% shows an Over-sold condition. Note how it signaled at each letter the end of the declining period and the start of a rising SPX, and note where it is today (D).
In this second chart, the lower line indicates the percentage difference among the Bullish and Bearish Newsletter writers (courtesy of Investors Intelligence). When the difference is over 30%, they forecast a rising market. When the difference declines toward or below -10%, they forecast the end of the corrective period (A, B and C). See where this Indicator is currently (D).
The lower line in the following chart indicates the percentage of Bulls among the AAII participants (courtesy of the American Association of Individual Investors - a contrary indicator). When less than 55% are bullish, it indicates the end of a corrective period and the beginning of a rising SPX. Note the current reading (D).
OUTLOOK
The PICTURES above show over-sold conditions. The negative WORDS in the newspapers (calling for a bear market as they did in 2018 and 2020) is just more evidence that supports the case for a turnaround (the next up-leg) in a week or so.
In New York the FAANG stocks (except Apple) are collapsing and are BEING replaced by Energy and Material stocks. A typical day shows the SPX down heavily and yet the Up Volume is almost twice as much than the Down Volume. New, mid-priced stocks are appearing among those reaching new 52-week highs. See our List of Investment Ideas for candidates.
PAC-20-198; MKT-501; February 08, 2022
Ron Meisels
Phases & Cycles Inc., 4000 Boul. De Maisonneuve West, Suite 2010, Montreal, QC, H3Z 1J9
Tel.: (514) 393-3653. E-mail: RonMeisels@phases-cycles.com
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