The SPY remains below a falling short and long term Chaikin trendline, making market conditions less than ideal for initiating intermediate (3-6 mo.) trend trades -- which is the foundation for the Chaikin system. The SPY bull-bear ratio, though flashing red as well, appears to have hit a low last week.
Oupeforming sectors, like Healthcare and Utilities, point to a defensive market posture, while cyclical areas of the market like Energy and Technology fall out of favore. Remember, the Chaikin Power Gauge ratio is a leading indicator, giving us a peek as to what areas of the market are likely to outpeform in the next 3-6 months.
For us, the preponderance of the evidence keeps us on the sidelines in terms of establishing trend trades. We'll continue to trade market swings in the short run and place speculative earnings bets, using the edge given us by the Chaikin Power Gauge.
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