Equities markets were down for the week as volatility continued

Clint Sorenson, CFA, CMT WealthShield

Long-term market internals broke below previous lows and now suggest further downside. Short-term market internals are not yet oversold despite bearish
sentiment. However, defensive assets are significantly overbought, suggesting a potentially precarious situation.

The Good:

The S&P 500 has not broken below key moving averages or support levels.
Several sectors remain in positive trends.
The ECRI WLI is up 0.29% year-over-year.

The Bad:

ISM Non-Manufacturing PMI dropped last month.
Inflation continues to slow.
The Dollar remains in a positive trend and the Yen was strong last week.
Market sentiment is negative as the risk free asset is outperforming both international and domestic equities as well as high yield bonds in a majority of time frames.

The Ugly:

The 4-week moving average of the ECRI WLI is negative -1.29% year-over-year.
Credit spreads are not confirming the S&P 500 and are widening.
Defensive factors and sectors are leading the market.
The U.S. 10-year yield dropped 12 basis points and suggest slower growth.

Chart of the Week: Long-term market internals are breaking down. This suggests that equity markets could also break down.

Chart 2: The U.S. ISM Non-Manufacturing Index dropped to 53.70, the lowest level since the 2015-2016 slowdown.

Chart 3: Producer Prices show a continued slowdown in inflation on a year over year basis.

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Author

Clint Sorenson, CFA, CMT

WealthShield

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