Why "financials over tech" may be just beginning: Investors have rotated out of technology stocks and into financials in recent months, enough to push the ratio between the sectors to an extreme. Other cycles have tended to keep going, favoring financials over tech, in the months ahead.

50-day average goes bye-bye: For the first time in almost 4 months, the S&P 500 closed more than a tiny bit below its 50-day moving average. It ended its streak within 15 days of sitting at a 3-year high, a sign of ebbing momentum. Of the 19 other times it behaved similarly since 1928, it tended to see further selling over the next week, with a positive return 42% of the time. But by 2 months later, it was higher 84% of the time, averaging +4.4%.

Bottom Line:

See the Outlook & Allocations page for more details on these summaries

STOCKS: Weak sell
The extreme speculation registered in January and February is starting to get wrung out. Internal dynamics have mostly held up, so a return to neutral sentiment conditions would improve for the forward risk/reward profile substantially.

BONDS: Weak buy
Various parts of the market have been hit in recent weeks, with mild oversold conditions. The Bond Optimism Index is now about as low as it gets during healthy bond market environments. Fixed income isn't responding well, so that needs to be monitored in case its transitioning to a longer-term negative market environment.

GOLD: Weak buy
A dollar trying to rebound from a severe short position has weighed on gold and miners. The types of signals they've given in recent weeks, within the context of their recent surge, have usually resulted in higher prices over a medium- to long-term time frame. Like bonds, gold and miners aren't responding very well, and this needs to be monitored.