From the desk of Willie Delwiche.
Key Takeaways:
- Breadth downgraded to neutral as trends in the US and globally weaken
- Absence of breadth thrust regime weighs on a market struggling for direction
- Reducing equity exposure in Cyclical and Tactical Opportunity portfolios
The divergences between what has been seen in the popular averages and what is happening beneath the surface have become significant enough that we have moved breadth to neutral in our weight of the evidence framework. This leaves the scales tilted away from opportunity and toward risk.
The most recent breadth thrust regime expired in early June and since then the percentage of global markets trading above their 50-day averages has fallen from the upper 80’s to now just 20%. One-third of the markets are not even above their 200-day averages. US industry group trends have also faltered. The percentage trading above their 10-week averages is breaking down while the percentage making new 13-week lows is breaking out.
