Market at a Glance - 3/30/2017

By: Christopher Mistal

March 30, 2017

Psychological: Fading. According to the most recent Investors Intelligence Advisors Sentiment survey bulls have retreated to 49.5%, bears are at 18.1% and correction is up to 32.4%. Bulls peaked at 63.1% at the start of March so this pullback in bullish sentiment is sizable however; neither the bear nor correction counts are elevated sufficiently to signal a clear, new buying opportunity. Current levels are essentially neutral; the market could easily snap the downtrend and return toward all-time highs or just fizzle out and meager sideways.

Fundamental: Mixed. Unemployment rate dipped in February from 4.8% to 4.7% with the addition of 235,000 net new jobs, inflation is trending in the direction the Fed would like to see and the Fed saw adequate strength in the market and the economy to raise rates again. But, U.S. GDP, updated today to a revised 2.1% is not exactly exciting. A healthier pace of growth would greatly improve odds for further market gains.

Technical: Bouncing. DJIA, S&P 500 and NASDAQ all found support around their respective 50-moving averages earlier this week and have since rebounded higher. Russell 2000 has not fared as well and is struggling to reclaim its 50-day moving average. Stochastic and relative strength indicators have turned and are improving. Faster MACD Buy Indicator applied to NASDAQ and Russell 2000 turned positive today while DJIA and S&P 500 are on the verge of turning. Previous all-time highs set on March 1 could provide some resistance.

Monetary: 0.75-1.00%. April does not have a scheduled FOMC meeting and it is probably not needed anyways. At their March meeting, action was taken and the target range for Fed Funds was raised by 0.25%. Although the Fed is clearly in a tightening cycle, the pace of increases has been slow and overall rates remain highly supportive to the market and the economy.

Seasonal: Bullish. April is DJIA’s best performing month since 1950, third best for S&P and fourth best for NASDAQ (since 1971). However, April also marks the end of our “Best Six Months” for DJIA and the S&P 500. On April 3, we will begin looking for our seasonal MACD sell signal and corresponding signs of seasonal weakness and will issue an Alert when it triggers.