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Sectors Still Look Bullish Despite Elevated Market Risk

With the elevated risk in the market, I am content to just raise stops. I do not plan to add any new positions to the portfolio this week. I realize the portfolio is sitting on about 20% cash, but

With the elevated risk in the market, I am content to just raise stops. I do not plan to add any new positions to the portfolio this week. I realize the portfolio is sitting on about 20% cash, but I would rather wait another week to see if the market is going to give some better indication regarding directional plays.

The bulk of the market Sectors are technically bullish, but they are not quite as bullish this week as they were last week. That, coupled with the strongly bearish first-trend time-cycle indicators, and I am just not willing to put the 20% cash to work this week.


Bull/Bear Rating and Turner CrossOver Oscillator Update…

The ratio of new technical long buys to new technical short sells is running at nearly 2-to-1 in favor of the bulls.

The time-cycle major index forecasts, including most of the major indexes and sectors, continue to indicate a fairly strong headwind for the next few weeks. The cycles indicate caution is advised. 

From a more technical observation, all but one (Utilities) Sector continue to remain in a technically bullish condition where the average price of all stocks in each Sector has move above its 50-day, time-shifted trend line enough to trigger a technical buy. Again… this is true for all major Sectors except Utilities. This number of buy-rated Sectors continues to represent a very bullish trend for the near term. Of the bullish trending Sectors, the Financials, Industrials, Healthcare and Technology are indicating the strongest trends.

Monitoring the inverse ETF market, the percentage of inverse ETFs indicating a buy signal moved down to 16% of all inverse ETFs this week. That is a 5% drop in Buy-Rated inverse ETFs in one week, which can be interpreted as a bullish indicator. Most of the buy-rated inverse ETFs continue to be in gold; but this inverse segment of the market looks to be ending its bearish trend. China and Russia inverse ETFs are trending higher.

The black line (net of the total of new technical long buy signals for the month minus the net of the total of new technical short sell signals for the month) of the CrossOver Oscillator, continues to support a recent bottom… a bullish sign. The red line (new short sell signals) continues to soften. This indicates a slightly overbought condition.

The Bull/Bear Rating moved up 1 notch this week to a [ + 3 ], primarily for two reasons: Strong technical indicators for most Sectors and the drop-off in the number of buy/strong buy-rated inverse ETFs. However, there continues to be a lot of risk in the market. The play continues to be to sell anything that is not performing well in this market and look for a suitable replacement. Caution is certainly advised from a time-cycle perspective, but remaining bullish is the order of the day from a technical perspective.



Turner Bull/Bear Forecast
For the Upcoming Week

The Turner Bull/Bear Forecast™ provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and, the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.

The Turner CrossOver Oscillator™ provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Signals) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite of both Short Sell and Long Buy Signals) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite of Signals line is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite of Signals line from moving lower to moving higher. Market corrections become much more likely when the Composite of Signals line crosses the Short Sell Signals line from below the Short Sell Signals line to above the Short Sell Signals line. The market is represented by the green shaded area.


As the markets put the debt ceiling debacle in the rearview mirror, more than a few issues remain open.