Scott MartindaleThe dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. Read more about Sector Detector: Finally, market capitulation gives bulls a real test of conviction, plus perhaps a buying opportunity

Much ado was made of China’s surprise 3% devaluation of their currency last week. But keep in mind, the yuan is pegged to the dollar, and with the dollar so strong, every major floating currency and commodity is down a lot more than that. Deflation is now a real threat. Then, there is the suddenly resolved issue of Greece’s debt (along with the worry of a domino-like fall of the entire Eurozone). Read more about Sector Detector: Currency wars take the spotlight as stock investors must gauge which news is relevant

As a rather uninspiring earnings season starts to wind down, bullish investors eager for a significant catalyst from company reports instead have been left a bit flat-footed and disheartened. With consumer sentiment and retail sales flagging in key overseas markets like Europe and China, global capital continues to flow into the safety of U.S. Treasuries, driving down bond yields despite a supposedly imminent fed funds rate hike. Read more about Sector Detector: Rankings take a defensive turn as bulls lack a suitable catalyst to sustain a rally

Even with many of the global issues pushed off the front page, eager bulls found yet another reason to keep the troops in the barracks. The only newsworthy items are related to corporate earnings reports, which have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bulls have taken their chips off the table until after Labor Day, while others have merely scaled back to scalping some trades. Either way, stocks appear destined to thrash about for the rest of the summer. Read more about Sector Detector: Lackluster earnings reports put eager bulls back into waiting mode

We all know the big news stories that have kept both corporate leaders and investors in a semi-state of paralysis. They involve the future of Greece in the Eurozone, China’s growth and stock market stability, and the Federal Reserve’s plan for gradually normalizing the fed funds rate. I noted in my article last week that the technical picture appeared to be firming up for the bulls as the 200-day moving average kicked in with solid support and traders seemed to be doing an orderly retreat-and-retrench rather than panic-selling. Read more about Sector Detector: Stocks break out from their holding pattern as global uncertainties begin to settle out

Of course, all eyes have been on Greece in an ongoing saga that, although critical to the Greeks, is mostly just an annoying distraction for global investors -- partly because it has been going on for so many years, with the proverbial can of inevitability continually being kicked down the road, and partly because there can be no winners in this intractable situation. Read more about Sector Detector: Bulls prepare for a new buying opportunity, courtesy of Greece

Two weeks ago, bulls seemed ready to push stocks higher as long-standing support reliably kicked in. But with just one full week to go before the Independence Day holiday week arrives, we will see if bulls can muster some reinforcements and make another run at the May highs. Small caps and NASDAQ are already there, but it is questionable whether those segments can drag along the broader market. To be sure, there is plenty of potential fuel floating around in the form of a friendly Fed and abundant global liquidity seeking the safety and strength of US stocks and bonds. Read more about Sector Detector: Bulls under the gun to muster troops, while bears lie in wait

After a brief pullback to retest support levels, it appears that bulls may be preparing to take the market higher. Although retail investors are still hesitant, risk-taking among institutions is apparent. Cheap cash from abundant global liquidity is hungry for higher returns. Margin debt is high. Credit spreads are low. Subprime loans are back in vogue. Small caps and the banking sector in particular look ready to resume a leadership role. Read more about Sector Detector: Bulls may be getting ready to push stocks higher

Early last week, stocks broke out, with the S&P 500 setting a new high with blue skies overhead. But then the market basically flat-lined for the rest of the week as bulls just couldn’t gather the fuel and conviction to take prices higher. In fact, the technical picture now has turned a bit defensive, at least for the short term, thus joining what has been a neutral-to-defensive tilt to our fundamentals-based Outlook rankings. Read more about Sector Detector: Stocks provide a tepid breakout as Fed greases the skids. So now what?

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive. Read more about Sector Detector: Bullish technical picture appears to trump cautious fundamentals

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