From the desk of Willie Delwiche.
Key Takeaways:
- US equities churn as new lows out pace new highs.
- Bond market is taking notice that the flat-footed Fed is trying to get ahead of inflation.
- 60/40 portfolio off to its worst start in a generation could have “passive” investors looking for greener pastures.
In the wake of the January sell-off, US stocks have been trying to get back in gear. So far that has been easier said than done. The initial rally attempt on the S&P 500 stopped short of the 50-day average and our sector trend indicator was unable to get back into positive territory. One telling sign that a churning/trading range environment remains intact is the new lows continue to outnumber new highs across the NYSE and NASDAQ. Since 2000 all of the net gains in the major US indexes have come in the 70% of the time that the net new high advance/decline line has been trending higher. Right now it’s been moving lower since mid-November - with less intensity than a few weeks ago, but lower nonetheless. It is exceedingly difficult for the indexes to make sustained upside progress when more stocks are making new lows than new highs.
