The 1-Minute Market Report - May 7, 2019

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Includes: BIBL, CHGX, CRF, DDM, DIA, DMRL, DOG, DUSA, DXD, EDOW, EEH, EPS, EQL, ESGL, FEX, FWDD, GSEW, HUSV, IVV, IWL, IWM, JHML, JKD, OMFS, OTPIX, PMOM, PPLC, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RVRS, RWM, RYARX, RYRSX, SCAP, SCHX, SDOW, SDS, SFLA, SFY, SH, SMLL, SPDN, SPLX, SPSM, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, USA, USMC, UWM, VFINX, VOO, VTWO, VV, ZF
by: Erik Conley
Summary

The market has taken a hit lately.

In just two days, the market has given up all of its gains for the last month.

No cause for alarm at this point, but certainly cause for getting your defensive strategy in order.

market direction

What happened last week.

What we're watching for next week.

The market has taken a hit lately. Should we be worried? A look at the data might help.

Chart of the Week - The reaction to China Trade War

In just two days, the market has given up all of its gains for the last month. As I've asked before, how many times do you want to keep earning the same dollar on your investments?

Chart 1. S&P periodic returns

The internals are weakening. No call to action yet, but pay attention. All I'm suggesting is that you look at it and do a gut check.

The numbers are still very positive, but now they're slipping just a little bit. No cause for alarm at this point, but certainly cause for getting your defensive strategy in order.

Chart 2. Percent of stocks above their 50-day moving average

There is a breakdown in the percentage of stocks that are trading above their 50-day moving averages. This is an early warning sign and not a "Sell" signal.

Chart 3. The flattening yield curve

The Treasury yield curve is not something to take lightly. It has been a consistent and reliable warning that the economy is nearing the end of the expansion phase and preparing to turn over into a new recession phase. Pay attention to this indicator.

Final Thoughts

This market decline is what I call a "Not for nothing burger." It doesn't mean much in the long run, but it is significant enough to cause astute investors to pay attention. We have barely broken the upper bounds of the bull market, but things could get worse from here.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.