Colin Twiggs on the US markets.
GDPup but ETF flows bearish

By Colin Twiggs
March 1, 2019 8:30 p.m. ET (12:30 p.m. AEDT)

First,please read the Disclaimer.

 

Real US GDP grew a healthy 3.1% in Q4 2018. Rising hours workedpoint to further gains in the new year.

10-Year Treasury yields rallied slightly but only breakout above2.80% would hint at a reversal in the down-trend, while breach of 2.60% wouldwarn of further weakness. Inflows into Treasuries normally coincide withoutflows from stocks, indicating a bearish outlook.

According to etf.com,US equities have seen $21.2 billion of ETF outflows YTD, while fixed incomerecorded $16.5 billion of inflows. The market remains risk-averse.

TheS&P 500 continues to test resistance at 2800. Bearish divergence on 13-weekMomentum (below) often precedes a market top. Another lower peak wouldreinforce the signal.

A correction in March is likely, possibly on conclusion of UStrade talks with China. Breach of 2600 would signal another test of primarysupport at 2350/2400.

"President Donald Trump said on Mondaythat he may soon sign a deal with Chinese leader Xi Jinping to end thecountries' trade war, if the two sides can bridge remaining differences.

But the lead U.S. negotiator said on Wednesday it was too early to predict theoutcome. U.S. issues with China are 'too serious' to be resolved with promisesfrom Beijing to purchase more U.S. goods and any agreement must include a wayto ensure commitments are met, U.S. Trade Representative Robert Lighthizersaid." (Reuters)

We are in a bear market that is likely to continue for theforeseeable future. The strength of the next correction will confirm or refutethis.

Right, as the world goes, is only in question between equals inpower, while the strong do what they can and the weak suffer what they must.

~ Thucydides (460 - 400 B.C.)