The stock market is rallying yet again today.
But hang on...
The market internals are suggesting bearish quite the opposite of today's counter trend move.
Here's an important message from CEO Keith McCullough:
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"When I look at my risk management signals, there are six markets that are currently signaling bearish trend in my quantitative Risk Ranges. What’s happened in the last few weeks is that the Nasdaq and S&P have joined the Shanghai Comp, the Nikkei, the DAX, the Spanish IBEX as signaling bearish trend." |
Our quantitative Risk Range model is based on the price, volume and volatility of a given asset. The model spits out the day's probably range for that asset based on these factors.
STOCK MARKET VOLATILITY
It's also worth noting, the VIX is in a bullish trend in our Risk Range model. In other words, don't expect the S&P 500 and Nasdaq bearish trends to change anytime soon as stock market volatility remains elevated.
As you can see in the chart below 2018 realized (or historical) volatility has more than doubled from 2017.
There's more.
STOCK MARKET VOLUME
Yesterday's rally was accompanied by very little market volume. If you think about it, lower volume on either a rally or selloff expresses a lack of conviction in the move from the broader investing community. The volume on yesterday's rally was down -24% versus the 1-month average and -30% versus the 3-month average.
Not good.
INVESTING IMPLICATIONS?
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