It’s the start of a new week as well as the semi-official start of the second half of the year, so let’s get right to our objective review the key market models and indicators and see where things stand. To review, the primary goal of this weekly exercise is to remove any subjective notions I might have in an effort to stay in line with what “is” happening in the markets. So, let’s get started…

The State of the Trend

We start each week with a look at the “state of the trend.” These indicators are designed to give us a feel for the overall health of the current short- and intermediate-term trend models.

Executive Summary:

  • The short-term Trend Model is currently straddling the line between neutral and moderately negative. But since stocks don’t go down anymore, we’ll call it neutral… 
  • The short-term Channel Breakout System remains on a buy signal, but a confirmed close below 2405 would produce a sell signal 
  • The intermediate-term Trend Model remains positive, albeit by the slimmest of margins. 
  • The Short- and intermediate-term Channel Breakout System are on the same signals at this time. Thus, a close below 2405 turns both red. 
  • The long-term Trend Model is still in good shape here. 
  • The Cycle Composite points straight up for the next two weeks. However, after that, well, not so much. 
  • The Trading Mode models are currently conflicted, but two out of three suggest a mean reverting environment persists.
  • In sum, the board’s green hue is a bit misleading as almost any downside action from here would cause indicators to flip.

    • The State of Internal Momentum

    Next up are the momentum indicators, which are designed to tell us whether there is any “oomph” behind the current trend…

    Executive Summary:

  • The short-term Trend and Breadth Confirm Model remains positive. However, we should note that since 2011, this mode hasn’t produced the type of solid returns seen over the history of the model (since 1998) 
  • Our intermediate-term Trend and Breadth Confirm Model has done a good job of keeping traders on the right side of the major trend and remains positive. 
  • The Industry Health model reading actually pulled back a little last week and more importantly, has been going nowhere fast for quite some time. I believe this is an indication of narrowing leadership in an aging bull market. 
  • After showing some signs of life in the last few weeks, the short-term Volume Relationship model is now back to neutral. 
  • While still green, the intermediate-term Volume Relationship bears watching here as demand volume is close to breaking into a renewed downtrend. 
  • The Price Thrust Indicator slipped into the neutral zone last week. 
  • The Volume Thrust Indicator flipped to negative. 
  • The Breadth Thrust Indicator remains neutral. 
  • My takeaway from this board is despite decent price action, market momentum has been on the weak side.
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