Daily Stock Market Update & Forecast – February 12th, 2018

- State of the Market Address:

  • The Dow is back above 24,000
  • Shiller's Adjusted S&P P/E ratio is now at 32.14 Off highs, but still arguably at the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 53 - neutral. Daily RSI is at 42 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,800 today (on weekly).
  • Weekly Stochastics at 56  - neutral. Daily at 22 - oversold
  • NYSE McClellan Oscillator is at -74. Oversold.
  • Volatility measures VIX/VXX positioning reversed dramatically right before the "crash".  Commercial VIX long interest went from being 22K contracts net long to being 30K contracts net short.
  • Last week's CTO Reports suggest that commercials (smart money) have, more or less, maintained their positioning.  For now, the Dow is 3X, the S&P is at 4X net short, Russell 2000 is now at 2.5X net short and the Nasdaq is net neutral.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

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