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Three essential charts to understand this wild market


Added 08-16-19 01:02:02pm EST - “Stocks have seen wild moves this week. Todd Sohn of Strategas Strategies says these three charts shine a light on what is going on in this market.” - Cnbc.com

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Posted By TheNewsCommenter: From Cnbc.com: “Three essential charts to understand this wild market”. Below is an excerpt from the article.

The S&P 500 was surging more than 1% on Friday, ending a week in which it swung from massive routs to major rallies.

This rebound might not be as triumphant as investors hope, according to Todd Sohn, director of technical strategy at Strategas Securities. He sees internal damage to the market that is keeping him cautious for now.

"The S&P is only about [5%] off the July highs, and still in an uptrend by our work -- yet only about 40% of [stocks] on the New York Stock Exchange can say the same," Sohn said Thursday on CNBC's "Trading Nation. " "There's been significant internal deterioration here that I think the S&P 500 has done a good job masking."

"The longer you're sitting in this 40% area of stocks in an uptrend the more it's going to weigh on these large-cap indices in the coming weeks," Sohn said.

However, a red-hot bond market could begin to cool down, which would trigger a rotation back into riskier assets such as equities, he reasons. The underperformance of the S&P 500 relative to bonds has reached oversold levels -- its relative strength index, a measure of momentum, fell to the year's lows earlier this month.

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