Sunday Stock Market Review
Last week was clearly a bad week for the stock markets. The S&P 500 was down -5.1%, NASDAQ was down -5.2% and the Dow Jones was down -4.2%. I am going to check today if any of the markets have turned bearish already.
Major Markets
Looking at the S&P 500 I see that the trending is still bullish. Per my model as long as the 10-day simple moving average is above the 20-day simple moving average it is a hold situation.
The NASDAQ and the Dow Jones charts also look similar. Clearly the last 3 trading days have been really bad. However, sometimes even a bad week does not fully reverse a trend. We can see from the chart above that there is a good possibility that the green line crosses below the red line in the next few trading days. But it is also possible that it does not and recovers to stay above. In my way, I wait to see what happens. I do not predict. Yes, I may eventually lose some money because I did not get out now. But I may leave money at the table as well if I got out and the trend stayed as it is now. That is the dilemma which is eliminated by my defined model.
Reviewing other markets, I see that the Russell 2000 and the Emerging Markets are also looking similar to the S&P 500. Big loss this week but uptrend is not yet reversed.
Sectors
Looking at the individual sectors I see that:
XLV - Healthcare is very close to reversing and trending bearish. I hold XLV call options and need to see how it goes Monday. I may have to get out of that trade but will wait for the trend to actually reverse.
Other than that, all the 15 sectors that I track look OK for now. No reversal in trend.
Countries
Looking at the countries:
EWU - United Kingdon looks close to reversing and turning bearish
EWJ - Japan also looks close to reversing and turning bearish
EWM - Malaysia has turned bearish
EWZ - Brazil is close to reversing and turning bearish
So, the countries are starting to look weaker quicker than the US sectors.
Conclusions
I have a number of open positions which I have entered into over the last 2 weeks as the markets had started to turn bullish. It does look like there is a good chance now that the markets reverse back into a bearish trend. If that happens, I will exit my positions and take the loss. But until then I will wait and see what the market does.