State of the Market
In our February 6th iInvest™ ALERT, and in the June Edition of the iInvest™ State of the Market newsletter, we pointed out that the declines and volatility in the stock market that began in February 2018 was simply due to an overbought condition, as most indices had gone up too far too fast, both on an intermediate-term and long-term basis. For the long-term uptrend to continue, we either needed a sideways move or a correction to fix this problem.
We also pointed out that the entire consolidation that began in February via the S&P 500 was a Pennant formation, which we now have broken out of, a positive development going forward.
Institutional “Smart Money” Program Buying
A positive development during the 2018 declines we observed and pointed out throughout 2018, was the large amount of Institutional “smart money” buy programs that were happening at key support levels. This information helped iInvest® determine early on that the declines would be short-lived.
Institutional (smart-money) buy programs picked up at the 2700 level on the S&P 500, just like they did at the 2600 level in February and April, showing this area should provide strong support going forward.
This development confirmed there was no need for iInvest® to trigger a TacticalSHIFT® during this decline.
See chart below from Market Tells showing the S&P 500 buy programs. Standard buy programs are in pink while Major buy programs are seen in blue.
Current State of the Market
As we look at the S&P 500, Nasdaq, Russel 2000 (small caps), and Wilshire 5000, they have all broken out above the 6+ month consolidation pattern.The Dow Jones Industrial Average and the NYSE (New York Stock Exchange) are lagging, but iInvest® expects new highs in the coming weeks.
Below, you can see the bigger picture of the 2018 decline via the Wilshire 5000 Index. You can see that the price action was not enough for iInvest® to trigger a TacticalSHIFT® for our clients.
Written by Craig Dillon
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