The Indicators Suggest Weakness Should Be Bought

August 5, 2019|4:43pm


It’s been a hectic travel weekend and I’m still on the road. And with all the news flying around at the moment, I’m spending a lot of time analyzing the situation. As such, I’m going to let the indicators do the talking this morning.

Weekly Market Model Review

Now let’s turn to the weekly review of our favorite indicators and market models…

The State of My Favorite Big-Picture Market Models

Two component models signals within the Primary Cycle board (my “Desert Island” and the Global Risk Model) moved from buy to hold this week. However, the Primary Cycle board remains in pretty good shape which suggests investors should treat pullbacks as buying opportunities and to continue to lean bullish. 

This week’s mean percentage score of my 6 favorite models slipped to 70.3% from 84.1% last week (Prior readings: 79%, 83.9%, 81.1%, 73.5%, 62.9%, 65.4%) while the median also fell to 68.4% versus 86.5% last week (Prior readings: 80%, 86.7%, 82.5%, 68.5%, 66.3%, 71.3%, 68.8%).

The State of the Fundamental Backdrop

With monetary conditions improving a bit and our economic composite pulling back a similar amount, the Fundamental board is pretty much unchanged. However, the overall backdrop remains largely positive.

The State of the Trend

As one would expect with the S&P 500 having its worst week of calendar year 2019, some of our trend indicators took a hit last week. The news from President Trump regarding additional tariffs on China surprised the market and caused traders to move to “risk off” positions. The obvious fear is the economic outlook will worsen as the trade war looks to be taking a turn for the worse.

The State of Internal Momentum

As I mentioned last week, not everything is rosy in the indicator world. Exhibit A in the argument continues to be the Momentum board. While the major indices are only a few days removed from all-time highs, the Momentum indicators have weakened noticeably.

The State of the “Trade”

While the “setup” was a little choppy and there was definitely a false start or two, the bears finally got to take advantage of the shorter-term bearish positioning. This week, the setup is much more neutral. This suggests that the bears could certainly continue to run with the ball for a spell.

Thought For The Day:

Kindness is a language which the deaf can hear and the blind can see. –Mark Twain

All the best,
David D. Moenning
Investment Strategist

David D. Moenning


At the time of publication, Mr. Moenning and/or Redwood Wealth Management, LLC held long positions in the following securities mentioned: None

Note that positions may change at any time.


NOT INVESTMENT ADVICE. The opinions and forecasts expressed herein are those of Mr. David Moenning and Redwood Wealth and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as investment recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

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