Leading the session higher was the Dow Jones Industrial Average with a gain of 182 points. NASDAQ and S&P 500 ended with gains. XLU was a big loser on the day as sellers pushed the group lower. Higher bond yields are not helping either. XLRE too ended lower by more than 1% on the session. Even cryptocurrencies suffered losses with higher bond yields. We could go on with GLD and SLV, but with the yield curve stabilizing interest rate sensitive groups will certainly respond accordingly. Volume was mixed on the session with NYSE volume running lower and NASDAQ higher. Outside of short-term overbought conditions this market is plugging along quite nicely.
The crowd has turned quite bullish. We are not at an extreme, but with AAII Bulls above 40% in the short-term we are a little too bullish. Bears are at 23.9% this week while not an extreme there aren’t enough bears suggesting a short-term top may be in place. Are we calling for an all-out bear market, no. However, understanding the market oscillates it would not surprise us to see the market pull in a bit here. The longer-term view we are not seeing evidence a bear market is around the corner. NAAIM Exposure index is also elevated at 92.26. Active Equity managers have a bullish view on the market. Those who were surveyed there was not a single respondent with short exposure. Price will always dominate our action, but when the crowd leans to one direction too far we typical see a short-term reaction.
We are still at the mercy to headline risk. The US and China trade deal has yet to be signed. This is just the first phase too. At any moment, we could see talks turn sour. Does this mean we sell everything and run? No, we simply follow the price action of the market. We hope you have had a great week of trading. Get out and enjoy the weekend.
