The bull market in the stock index futures is finally showing signs of tiring. The primary difference over the last week has been the record selling by the commercial traders, which has driven their net position to a new net short record. We’ll look at the structural forces at play through the Commitments of Traders report and distil this information down to an actionable daily scale to determine if the stock market is rolling over.
At this stage, U.S. markets will remain the key driver for global investors. The Dow Jones industrial average dropped for eight consecutive days heading into Monday; the longest losing streak since 2011, but nothing dramatic here given that the total declines are less than 2%. This selloff is obviously not a good sign, but it shows that investors are not yet in a stage of fear, but are somewhat on the defensive side.
So what about these charts? We have an interesting divergence working. The Nasdaq hit a new high after the Fed while the Dow and S&P 500 did not. The Nasdaq made a new high by 82 cents. But as you can see, the SPX is responding to 620 hours of this move off the November low. This is also the 89-90-day window off that November low and it’s on the front end of the seasonal change point. It’s very possible a change has already started. If the stock market does not correct given these important cycle points clustered with the Investors Intelligence report we are really dealing with a runaway train.
U.S. stocks were mostly higher on Wednesday, with investors counting down to the conclusion of the Federal Reserve's two-day meeting, where the central bank is widely expected to raise rates for the first time this year.
U.S. stocks looked set to open marginally lower on Tuesday as investors fixed their sights on the outcome of a meeting where the Federal Reserve is widely expected to raise interest rates for the first time this year.
U.S. stocks rose on Friday amid broad-based gains as a stellar job report underscored the strength of the economy, potentially giving the Federal Reserve enough ammunition to raise interest rates next week.