Comments for August 8, 2023

Not much has changed in the past two weeks: on a yield basis, high interest rates make equities markets less interesting compared to corporate bonds. Indeed, same yield valuations should push the $SPX down to about $4100.





On the other hand, money is still coming into equities as we can see below: the Money Flow for both sections of the S&P500 is still far in positive territory.



The NQ8 is weakening but still not issuing a short signal.



The most problematic sectors are the more speculative smaller caps: IPO,ARKK and XBI.







This is probably the reason why the Cumulative Tick is negative.



On a longer time frame, we can see that the Mcclellan indicator turned down some days ago and



that the NHNL indicator is making lower highs.



Conclusions:

Equities continue to be overpriced in terms of yields.
However as of now, the Money Flow does not indicate that markets are rolling over.
I suspect that we might bounce before real weakness settles in.