Stock Market Outlook: Are Investors Souring On Momentum?

Stocks slumped on Tuesday, but not all is lost by any means. The S&P 500 Index fell 0.76% while the Dow Jones Industrial Average fell 0.94%. However, both indices managed to retain strongly bullish intermediate postures and trade above the 30-day moving average.

The NASDAQ Composite also fell (1.12%) and continues to be the laggard. It is now trading below its 30-day moving average along with a having a weakly bearish posture. Same goes for the Russell 2000 index… makes sense after the small cap index fell 3.58% yesterday and is trading below its 30-day moving average! The Russell 2000 also has a “3 Red Arrows” signal.

Momentum stocks have fallen to the bottom of the Factor Selector, while Value stocks remain at the top. Dividend Yield is creeping higher and now has overtaken the #2 slot from Low Size.

The U.S. Dollar surged Tuesday; that led to pressure in commodities (gold down 0.73% & oil down 5.6%) and foreign stocks (developed down 1.4% & emerging down 1.9%). Emerging markets are still relatively weak and trading below a falling 30 day moving average, in addition to having a strongly bearish posture.

Our trade application example featured a selling a bear call spread on Tesla (TSLA) due to its continued bearish intermediate posture along with rolling over just below the 30 day moving average with relative weakness.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Stock Market Video – News, Analysis & Insights for March 23

Twitter:  @BrandonVanZee and @Market_Scholars 

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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