All four signals remain unchanged from the prior week, but it looks like overall market sentiment is becoming progressively more bearish. Utilities and Treasuries remain the key assets to watch. If you’re looking for bullish signals, small-caps have been outperforming large-caps and gold has moved pretty much sideways for most of the past month.
The lumber/gold signal moves to risk-off this week as I’ve been anticipating for a couple of weeks. The Treasuries signal is currently confirming the rally in stocks, but utilities/S&P 500 signal could be flashing the biggest red flag.
Despite small-caps outperforming large-caps since the September 23rd bottom, utilities have been providing steady leadership, making the current rally look rather tenuous. The lumber/gold signal, while risk-on today, continues to deteriorate as lumber prices crash.