Stocks on June 15, 2018: outlook


*These are my discretionary thoughts on the market. My Medium-Long Term model determines my trades. Go to the homepage for my latest market outlook. I update this webpage throughout the day.

Thoughts

  1. Inflation-adjusted Retail Sales are still trending higher. A medium-long term bullish sign for the stock market and economy.
  2. Initial Claims are still trending lower. A medium-long term bullish sign for the stock market and economy.
  3. Continued Claims made a new low. A medium-long term bullish sign for the stock market and economy.

Read Study: the Euro crashed yesterday. Bearish for Euro and bullish for USD
1 am: Inflation-adjusted Retail Sales are still trending higher. A medium-long term bullish sign for the stock market and economy.
The latest reading for Retail Sales demonstrates that inflation-adjusted Retail Sales are still trending higher.

This is a medium-long term bullish sign for the stock market because inflation-adjusted Retail Sales typically trend sideways before an equities bear market or economic recession begins.

This chart demonstrates the positive correlation between the S&P 500 and Retail Sales.

1 am: Initial Claims are still trending lower. A medium-long term bullish sign for the stock market and economy.
The latest reading for Initial Claims went down from the previous week’s reading (218k vs 222k). The key point is that Initial Claims are still trending lower right now.

*Initial Claims lead the economy and stock market. Historically, its trends higher before a bear market in stocks started (see study).
We use Initial Claims data in these 2 trading models (here and here). These 2 trading models state that you should be long stocks right now because Initial Claims data is still trending downwards.
This suggests that the bull market in stocks is not over because Initial Claims have not trended higher yet. HOWEVER, we are watching out for any SUSTAINED increase in this data series because Initial Claims are very low right now (historically speaking). We are trying to catch the bull market’s top because the bull market most likely only has 1-2 years left.

This chart demonstrates the inverse correlation between the S&P 500 and Initial Claims. A downwards trending Initial Claims = medium-long term bullish for the stock market.

1 am: Continued Claims made a new low. A medium-long term bullish sign for the stock market and economy.
Continued Claims just made a new low for this economic expansion, falling from 1.746 million to 1.697 million. The key point is that Continued Claims are still trending lower right now.

Like Initial Claims, Continued Claims lead the stock market and economy.
This suggests that the bull market in stocks is not over because Continued Claims have not trended higher yet. HOWEVER, we are watching out for any SUSTAINED increase in this data series because Continued Claims are very low right now (historically speaking). We are trying to catch the bull market’s top because the bull market most likely only has 1-2 years left.

This chart demonstrates the inverse correlation between the S&P 500 and Continued Claims. A downwards trending Continued Claims = medium-long term bullish for the stock market.

Read Stocks on June 14, 2018: outlook

Outlook

Here’s what I think will happen based on my discretionary outlook.

  1. 2018 will trend higher but will also be a choppy year.
  2. The S&P 500 has approximately 1-2 years left in this bull market.

I do not use my discretionary outlook to place entry/exit trades. I am 100% long SSO (2x S&P 500 ETF) because my Medium-Long Term model does not foresee a significant correction at this point in time. I ignore small corrections. I only sidestep significant corrections and bear markets.
I have been long the S&P 500 since September 7, 2017 when it was at 2465.
*I also have a small Day Trading portfolio. Click here to view my day trades.

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