World Blog by humble servant. Market Outlook....Fact Base Trading.....The Market Speaks Listen.

Market Outlook: The technical condition of the market was little changed this week but remained positive. The major averages struggled at key resistance areas but held key support levels during intraday weakness. The technical indicators are in positive ground with several indexes working off overbought conditions after the previous week's spike. The different indexes traded in a narrow range for most of the period with selling well contained as investors bought the dips. The DJIA outperformed and flirted with its August high after breaking above a downward sloping long-term trend line and remains above its 200-day MA. The S&P 500 remains positive but failed to make much progress this week. After failing at its 61.8% retracement of the August-October selloff on Tuesday, the bellwether index bounced off support at its rising 100-day MA on Thursday keeping bullish momentum. The NASDAQ rally stalled at its 100-day MA during the week, and its reversal was held in check by its 50-day MA keeping the uptrend intact. The secondary indexes, which market technicians would like to see lead the stock market higher and lower, showed some negative divergence this week however, as the DJ Transportation Index and small cap Russell 2000 were unable to hold support at their respective 200-day MA. The Philadelphia Semiconductor Index rally stalled just below its 200-day MA on Tuesday but bounced off its 100-day MA on Thursday. That should be looked at as a positive however, after a +26% spike off the 11/03/22 intraday low through Tuesday's high. The VIX traded in a narrow range in the low 20's throughout the period hinting that traders don't see a bigger correction coming over the near-term. Underlying breadth was slightly negative with both the NYSE and NASDAQ Advance/Decline lines showing stocks were under distribution. New 52-week lows outnumbered new highs but contracted on the NASDAQ, but the new highs outdid the new lows on three days on the NYSE. Investor Sentiment saw an uptick in the number of Bulls. The National Association of Active Investment Managers (NAAIM) Exposure Index jumped to 65% exposure to equities, up from 54.6% the previous week, while according to Investors Intelligence, the Percentage of Bullish Investment Advisors topped the Bearish Advisors for the first time since mid-September. Finally, the retail investor seems to be climbing on board. The American Association of Individual Investors (AAII) showed 33.5% of retail investors are bullish, up from only 25.1% prior. That is below the historical average of 37.5%, but it is the higher showing for the bulls since the week ending 12/31/2021! After bouncing off the October lows a look at the different sectors might help investors determine where they need to be if an end of year rally unfolds. Of the 11-sectors followed, six are currently rated Long and carry a 50-day RS above 1 meaning they are outperforming the S&P 500. Ranked strongest to weakest by Relative Strength they are Energy (XLE), Industrials (XLI), Financials (XLF), Materials (XLB), Healthcare (XLV) and Consumer Staples (XLP). According to Sam Stovall, chief investment strategist at CFRA and author of ìThe Standard & Poor's Guide to Sector Investingî, excluding Industrials and Financials, these sectors have historically done well late in the business cycle as the economy weathers slowing growth, rising rates and increasing signs that a recession may be in the forecast. All of the above sectors are currently trading above their respective 200-day MA and investors could look to rotate into these on market weakness, keeping an eye on key moving average support levels. Keep in mind your long-term investment goals and know that risks remain with market uncertainty.Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times. Currently, the CTI is Positive at +10, unchanged from the previous week. Cycles B, C and D are bullish, while Cycles A and E are bearish. The CTI is projected to remain in a positive configuration into December. Momentum Index (MI): The market's momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish. The Momentum Index is Neutral at -3, unchanged from the previous week. Breadth was mixed at the NYSE as the Advance/Decline line lost 959 units while the number of new 52-week highs exceeded the number of new lows on three sessions. Breadth was negative at the NASDAQ as the A/D line dropped 2132 units while the number of new lows out did the new highs on each day. Finally, the percentage of stocks above their 50-day moving average eased to 71.7% vs. 73.2% the previous week, while those above their 200-day moving average fell to 39.4% vs. 41.6%. Readings above 70.0% denote an overbought condition, while below 20% is bullish. Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. It tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Neutral at +3, down a notch from the previous week. In addition, we track money flows into and out of Equity Funds and ETFs which as of 11/16/22 shows inflows of $14.6 billion. Market Posture: Based on the status of the market timing models, the Market Posture is Bullish as of the week ending 10/21/2022 (DJIA - 31082.6). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below. Industry Group Rankings: What's Hot (88) What's Not (3). Of the 91 Industry Groups that we track, 88 are rated as either Strong or Improving while 3 are regarded as Weak or Deteriorating. The previous week's totals were 85-6. The following are the strongest and weakest groups for the period ending 11/17/22. Strongest: Oilfield-Equipment, Oilfield-Integrated Majors, Metals-Non Ferrous and Oilfield-Drilling. Weakest: Internet-Software, Advertising, Automobile Manufacturing and Electric Utilities.