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Don’t Overreact to Headlines, Bull Intact; CME Has Potential

January 31, 2020
Don’t Overreact to Headlines, Bull Intact; CME Has Potential

A major benefit of incorporating technical analysis into the investment process is that it provides a framework or perspective to help interpret the overwhelming amount of information investors have to digest. The monthly four-year cycle work that I follow continues to suggest equity markets should move higher through 2020 into 2021 before a cycle peak develops.

On a tactical basis, however, a multi-month pullback should not be a surprise following the surge through 3Q19. Weekly momentum indicators, which track one and two quarter shifts, have been turning down from overbought levels in the past three to five weeks, notably for more cyclical sectors such as EAFE, EM and US sectors such as financials, industrials and resources.

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