Week 18 Trending Thursdays
Summary
Per the models I work with and the ones I follow, the overall market is overvalued by around 11%. Does that mean the markets will fall by that much? Not necessarily. But it does mean that the probability it will fall is higher. Plus the trending is pointing to that.
Major Markets Trending
The markets have now closed lower 3 days in a row and yesterday’s price action made some meaningful changes to my major markets trending heat map.
The changes from yesterday pre-market to close of market are highlighted above. These are meaningful conclusions from my modeling that the markets are short-term trending bearish. The Russell 2000 remains perfectly bearish.
I continue to remain short the IWM (big), SPY and QQQ (both small). I will likely add to them more today if markets go up.
The Volatility Index VIX has jumped from 15.78 close on April 28th to 19.30 pre-markets today as I write this. That is up +22% within a week.
KRE
I am short KRE which is a gift that keeps giving. I have no idea when the bank crisis gets over, but I do not see any real catalyst to reverse its downfall. Especially the regional banks.
S&P 500 Top 24 Trending
I like to check-in on the Top 24 stocks that make up about 40% of the S&P 500 as it gives me the underlying health of the overall market.
Again, the changes are highlighted just from yesterday pre-markets to today pre-markets. We can see the deterioration in the trending.
Today is AAPL earnings release after market close. There is a lot of hope that it will pull the markets higher. However, it is down in pre-markets and has closed lower the last 3 trading days. It is still up +31% year-to-date. So, feels like priced to perfection and the bar is high for it to deliver. We will know tonight.