What Seems Most Constructive and What Seems Most Worrying?
Today’s post is a question from a friend, “what seems most constructive to you and what seems most worrying?” As you might expect, I repeated comments shared with members during the daily LIVESTREAM broadcast. Below is our conversation.
Vinny: Most constructive? Stocks are making 52-week highs in key sectors. Very few are failing which suggests relative strength in the underlying stocks. The chart below, courtesy Arthur Hill over at Stockcharts.com represents more than 60% of the weight of S&P 500. All of these sectors are making 52-week highs. XLB XLI XLP XLV XLK
Vinny: To be honest, I’m not worried about much. News ALGOs keep trying to shake the markets but SPY NDX IWM NYSE remain strong. Despite the constant bombardment of negative news from the financial media, aka CNBC and Bloomberg, tariffs and trade war fears have imparted minimal impediments. The intraday weakness has been an opportunity.
Vinny: Horrible shape? S&P is trading at all-time highs with a large portion of component companies reporting a beat in sales and earnings. Guidance has been bullish, next quarter.
- For Q3 2018, the estimated earnings growth rate for the S&P 500 is 19.9%. If 19.9% is the actual growth rate for the quarter, it will mark the third highest earnings growth since Q3 2010 (34.1%). – FactSet
Vinny: S&P 1500 is on a buy signal, with no hint of a sell signal to date. The histogram is green producing tall bars on THUR/FRI. Price came back to its break out zone on Friday, two weeks ago, and bounced. Buyers stepped up in earnest.
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