Review

• The S&P 500 lost 2.9% for the week and the Dow Jones Industrial Average lost 2.0%. The Nasdaq closed 3.5% lower.
• All 3 indexes hit new lows last week Tuesday.
• For the year, the S&P 500 is down 11.8% as of last Friday and 3.9% for the month.

Outlook

We maintain our negative outlook from mid-January. The reason for this is that the participation of the overall market in the current downtrend is still very strong. Thus, the chances of a sustainable trend reversal remain low. The Big Picture indicator continues to signal a negative market environment for risk, characterized by negative forward looking returns and high volatility. The reason for this is that last week’s selling pressure was definitely driven by a broad base and thus remained qualitative.

• For example, the number of stocks, there is still a significantly higher number of stocks which have fallen to a New 52-week low, while there have been hardly any 52-week highs worth mentioning.
• The percentage of those stocks that are trading above their 100 or 150 day average remains low at under 35%. This shows that the majority of all U.S. listed stocks are still in a medium-term downtrend and thus the negative momentum is still broad-based.
• Globally, the picture also continues to look very battered, with only 19% of the 35 major local equity indices still trading above their 200-day averages. This is also another sign that argues against a quick V-shaped recovery.

Summary

• In sum, our assessment remains unchanged negative. With the current signal situation, we still think it is too early to build risk.