Coolhand's Market Analysis

The Top 50 had dropped overall stock exposure by about 14% over the past two weeks and what did the stock market do? The S&P 500 rose 2.44%, while the Wilshire 4500 tacked on 3.02%. But only those who were chased to the sidelines missed out as overall stock exposure for this group never fell below 82%. The main point however, is that in a bull market drops in stock allocations greater than 10% have tended to be punished. This time it took an extra week for the buy signal from two weeks ago to play out. This week, the Top 50 increased stock exposure by 15.94%. In a bull market, that may or may not get punished, but chances are pretty good we'll see some selling pressure this week regardless. However, it is OPEX, which generally means stock prices will find some level of support so I'm not anticipating anything dramatic to the downside. There's still plenty of liquidity in the market and dip buyers are stepping in quickly when weakness does present itself. That's a tough combination for the bears to overcome.




The chance for some selling pressure increased as a result of the bullish stock allocation shift for this week. But I'm thinking any downside pressure will be bought or contained and given this remains a bull market the indexes could end the week higher regardless.




The Total Tracker is not as predictive as the Top 50. Their stock allocation rose by a very conservative 0.7% this week to a total allocation of just 39.55%. That's conservative in a bull market, which is another reason to expect prices to remain elevated for the time being.



If one is a bull, there's not much not to like about this chart. Price is back in that upper trending channel and both RSI and MACD are rising. It is what it is until it isn't. Meaning that as long as there remains a bid under price, we'll likely continue to track higher.