The Strongest Index Against A Negative Backdrop
Friday saw another big day for the bulls after a little pause following a powerful four days. The least talked about index is below, the S&P 400, which has mid-sized companies. This is now the strongest index and just ahead of the Russell 2000.
I spent a lot of time over the weekend running and re-running our non-leveraged, non-aggressive models to see whether the strength over the last week qualifies as a thrust for continuation straight into 2027. I did not like what I saw. Too many warning signs that this is not the beginning, at least not yet, of a new leg in the bull market. And then our leveraged models want to cut more risk after what was done on Friday.
Is this the end of the bull market?
I doubt it. Look below. The NYSE A/D Line just made a new high. That’s not what you typically see at the end of a bull market. Rather, as I have written about all year, I think there is one more decline coming this quarter before another and even stronger launch to new highs.
What happens if we’re wrong?
That’s always possible. It’s happened before and will happen again. If our models change down the road, so will we. I won’t die on this or any investing hill. Just keep playing the odds. When risk/reward is in your favor, attack. When it’s equal, do nothing. When it’s against you, take action.
On Friday we sold TQQQ, SSO and some GDX.
