Weekly Risk Signals

The markets are still looking quite vulnerable here. That doesn’t mean we couldn’t see a rally this week. Conditions aren’t favoring a sustained rally though. I have a feeling that there’s still more air to be let out of this bubble. The lumber/gold, utilities and S&P 500 moving average signals are all risk-off and none are particularly close to turning.

We haven’t seen many weeks like this recently, but last week’s action looked like a textbook risk-off move in the markets. This was just one week though. We could see a rally this week from oversold conditions, but I want to see some carry through on this Treasury bond bounce before we start calling for bottoms.

After some mid-week excitement surrounding the Fed meeting, the end result is that equities finished the week in roughly the same place that they started it. It seems clear at this point that the Fed will keep raising interest rates until something breaks. The headline economic report this week will be Wednesday’s U.S. inflation reading for April.