Stock Market Outlook: Monitoring the “Sell” Signals

Brandon Van Zee

The S&P 500 Index surged 4.94% on Tuesday, off-setting part of Monday’s historic losses while marking the largest up day since December 26, 2018.

The last 10 times the S&P 500 fell by over 5% on a Monday, it then snapped back and rallied over 2% the next trading day.

Despite the strong bounce, all four major U.S stock market indices undercut Monday’s lows and continue to have strongly bearish intermediate postures.

The Russell 2000 Index appears to be the current laggard; it was the only index to not close above the high of yesterday’s candle.

The Russell 2000 is very likely to see a “death cross” on the 10/40 weekly crossover method at the end of this week; the Dow Jones Industrials may also be joining it.

All four stock market indices continue to have a “3 Red Arrows” signal.

Government bonds fell and interest rates spiked in dramatic fashion, but the 10 Year U.S. Treasury still only yields 0.75%.

Gold fell 2%, but remains a rare asset class that is still uptrending above a rising 30 day moving average.

Stock Market Video – March 10, 2020

The Consumer Staples are the only sector that currently has a strongly bullish posture; they’ve also seen a major rise in the Sector Selector rankings.

All eleven sectors rose on Tuesday, but they are also all trading below falling 30 day moving averages.

Our trade application example featured selling a bull put spread on Clorox (CLX) due to its consist uptrend despite the turbulence in the broad markets.

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.