Bears are Weakening

Short-term:

Last week we saw the pullback we were expecting. We also filled the gap to the tick. The Bears however were the weakest they have been since the start of the range. This give Bulls the opportunity to take back the ball and make another attempt to break the 280 level, as well as the channel line. However, Bears still have one more shot here early this week.

 

Statistics for 1 down week on the S&P: next week historically, has a 59% chance to close in the green, with a decent profit factor.

Medium-Term:

We are in the final phase of the long 8-year bull market and we just saw/are currently in the exhaustion phase of the Bull move. Since we have finally seen the abrupt pullback, we have been mentioning, Bulls will now use their get-out-of-jail-free card (from the long-term update). We are also currently seeing the trading range we spoke about which could still last another month or so. Bulls will then likely try at the least, to retest of the January high. So while we believe the February pullback was a buying opportunity. The Bulls safety net is now gone, until a decisive new high is reached.

The period above the moving average came to an end at 64 weeks. This was the longest period above the average in the history of the S&P! So we clearly saw a historic bull move. Markets have inertia and this is why we believe Bulls are still safe and will likely (at the very least) make a clear lower higher over the next few weeks/months. So for now, the chance of this turning straight into a bear market are less than 20%.

Long-Term:

Long-Term Market Outlook (Updated 11/5/17).

The Calendar:

This week: we will have the FOMC announcement (currently there is a 94% chance of a rate hike).

Next week: Will be quieter and the Market will be closed in observance of Good Friday.

Trend Following Models:

Our long-term models are Bullish.
Our medium-term models are Neutral.
Our short-term models are Neutral.

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