The market continued to slide this week, as the S&P 500 and NASDAQ each dropped over
1%. The S&P 500 has pulled all the way back into its base and is now trading below 10-week
moving average support. The NASDAQ, which has been the stronger of the two averages, is
still trading slightly above support levels, but has picked up four distribution days over the last
two weeks. Additionally, volatility, which was absent in February, has begun to pick up again,
creating another trendless situation similar to what was seen earlier in the year. The positive
is that leadership ideas are still acting okay, though many have been unable to advance into
higher highs after breaking out last month. With volatility increasing, things could snap back
very quickly, but until then, we advise caution. With the distribution day count on the rise
and another break back below the 10-week moving average on the S&P 500, the market’s
status has been changed to Under Pressure.
Symbol: GRUB
US Focus Long
The market pulled back aggressively on Friday, now trading about 1-2% off record high
levels. Despite the pullback, the distribution day count remains low, and leadership ideas are
still holding support levels, digesting strong February gains. Going forward, the market will
need to catch support and continue to absorb previous gains, while also avoiding additional
distribution days. This action will allow leadership ideas to advance into higher highs. We
remain positive on the market but will be watching for additional distribution in the coming
days. The averages remain in a confirmed uptrend, now up 7% on the S&P 500 and 11% on
the NASDAQ, since the October follow-through day.
US Focus Long
• The market continues to act constructively, inching into record high territory and avoiding
distribution. New ideas have been plentiful, generally emerging from consolidation after
reporting strong earnings results. Considering little changed week over week, our positive
sentiment remains. The confirmed uptrend that began in October is now up 9% on the S&P
500 and 13% on the NASDAQ.
• Still, despite the very constructive nature of the U.S. market year-to-date, the S&P 500
(2.5%) and NASDAQ (5.0%) are well below average developed market gains of around 10%
globally.
