Waiting for a Signal From the HCM-Buyline®

April 04, 2019

The market is overbought and is stalling at the 2650 area on the S&P 500, which has a lot of overhead resistance. Look for the market to trade sideways to down for a bit of time as it tries to move higher. We are still holding a lot of cash and will wait until we have a new signal to buy from the HCM-Buyline®.

01-23-2019 SPY


Intermediate-term indicators are likely to improve through Q1. Despite the potential for a short-term pause, weekly momentum and sentiment indicators are still relatively early in upturns, suggesting any near-term pullback is likely to be short-lived. Our expectation is for further upside in Q1 following a near-term pullback.

Existing home sales in December had the largest decline since November 2015 at 6.4 percent. It was also the lowest level since November 2015 at 4.99-million-unit annual rate. The consensus was for a modest 1.3 percent pullback to a 5.25-million-unit rate. On a y/y basis, sales are down 10.3 percent, the steepest decline since May 2011. All four regions fell. The NAR ascribed the weakness mostly to higher mortgage rates. But rates have subsided since then, a positive for the spring home buying season.

  • The Reuters/University of Michigan Consumer Sentiment Index sank 7.6 points in the preliminary January survey to 90.7, the lowest level since October 2016, and below the consensus of a modest 1.9-point pullback to 96.4.
  • Both current conditions and expectations fell.
  • The report noted that the government shutdown, tariffs, financial market volatility, the global slowdown, and uncertain future monetary policy all weighed on consumer sentiment.
  • It was the biggest decline since December 2012, and a 2.0-standard-deviation event, highlighting that drops of this magnitude do not happen frequently.
  • Since 1990, such declines have been followed by weaker-than-average real consumer spending growth up to a year later.

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