Week 7 Major Markets Trending and Performance
It was a mixed week with 3 days up and 2 days down for most of the indices. Overall, most markets trending weakened with the Russell 2000 being the strange exception. The week-over-week performance was mixed. For year-to-date, all the markets remain up with February dampening some of the gains from January.
Trending Heat Map
S&P 500 price dipped below its 10-day and 20-day moving averages. (I am short SPY using puts).
NASDAQ price dipped below its 10-day moving average. (I am short QQQ using puts).
Russell 2000 price crossed over its 10-day moving average and turned perfectly bullish again.
China FXI continued to stay weak being short-term bearish and the price also below its 50-day moving average.
The EFA price dipped below its 20-day moving average and also turned short-term bearish. (I am short EFA using puts).
Emerging Markets weakened further with the price dipping below its 50-day moving average.
Dow Jones weakened with the price dipping below its 10-day and 20-day moving averages.
Week-over-Week Performance
(Note: There may be a slight difference when compared to other calculations of the week-over-week performance. This is due to my use of the weekly start of the trading - usually the Monday of the week - as the starting point of the week. Other calculations may be using the close price of prior week as the starting point.)
Performance over various periods
Observations and Conclusions:
The trending of the markets outside the US has gone through the cycle of being perfectly bullish and now down to mostly being short-term bearish. This is as per the FXI, EEM and now EFA. For the short-term this could very well happen to the US markets as well in the near future. There is a higher probability of that happening.
For the long-term, all the markets (except the NASDAQ) are bullish, and that reversal usually takes time. So, we could be in a period of short-term (think up-to 3 months) swings between bullish to bearish and back to bullish before the long-term trending changes.
The S&P 500 is now down 2 weeks in a row albeit the magnitude has been minimal. The NASDAQ is holding up much better over the last several weeks being down only once in the last 6 weeks. The EEM and FXI have been hit the hardest last week and continue to be performing the worst in February.
Overall, the February swoon has not yet wiped out the January gains and all the markets have held on to their year-to-date gains. So far.
I will continue to play the very short-term to the downside for now until the market tells me I am wrong.