From the desk of Willie Delwiche.
Key Takeaway: In recent weeks, the bulls have made their presence known after hiding in the shadows for most of the year. But as they inch their way forward, they will need assurance from the market that they’re moving in the right direction. So far, any signs of positive feedback have been lacking. New lows remain greater than new highs (for 35 weeks and counting). And there is an absence of strength among global markets, although they have stopped going down. The market needs to turn it up in regards to price and participation if the bulls are to prove more than a bunch of wallflowers.
Sentiment Report Chart of the Week: How Do We Keep The Bulls On Dance Floor?
If we are going to have a party, we need to keep bulls on the dance floor. One way to do that is through improved price action. We know that it takes bulls to have a bull market, but it also takes a bull market to keep the bulls involved. When we look across various assets, we keep coming back to key levels from 2018. The Value Line Geometric Index is struggling to get back above its pre-COVID highs, copper is finding support at its 2018 highs and Treasury yields briefly poked above their 2018 highs before reversing lower. Not sure whether it will be above or below, but I expect all three of these to end up on the same side of those key thresholds. If it’s above, equity bulls are being rewarded and they are likely to keep dancing. If it’s below, then it's back to enduring taunts from bears and wondering why they bothered showing up in the first place.
