Quite the Departure

This entry to our internal market log will serve nicely as this week's mid-week message.

3/17/2025

Like I said in Thursday’s video, the US equity market was due for an oversold bounce, which we saw on Friday… That was largely a massive short-squeeze (sentiment was in the gutter), which of course included options dealers covering their short-put hedges big time.

Technically-speaking, despite the big thrust down through the 200-dma, it would be highly unusual to not see a retest, perhaps several (i.e., Friday’s rally could easily bleed through to the next few days/weeks), even if this is the beginning of something more severe to the downside… The 50-DMA slope has now turned decidedly bearish:



At least for the moment we can conclude that the Administration has the stomach for more downside… Here’s Scott Bessent yesterday:

“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy, they are normal,” Bessent said Sunday on NBC’s Meet The Press. “I‘m not worried about the markets.”

That’s quite the departure from what traders and investors have grown accustomed to.

All things equal, I expect it’ll take a notable change of tone from Washington to instill the confidence that would see the US equity market back to all time high territory anytime soon.

In the meantime, retail sales, consumer and business sentiment, and earnings outlooks from the retail space are all starting to show signs of some stress in the economy.







Our PWA Index remained at -9.3 last week, although Small Business Sentiment went from positive to neutral, while Commercial and Industrial loans improved from negative to neutral…

Currently 16% of our indicators read positive, 26% negative and 58% neutral.