Last week’s call worked out almost as predicted: a higher close, unfortunately we didn’t see the pull back of ~1% as expected.
Setup for week 12 is mixed with a slightly bullish bias. I do expect a sideways move with a low in the range of 1.0 – 2.0%.
- Direction: long term up, intermediate-term up
- Volatility: long-term low, short-term higher
- Trend-health: long-term trending environment (TSI >1.65) and intermediate trend conditions have weakened for twice over the last two weeks.
- Channel: intermediate channel position bellow mid-point.
- OB/OS: RSI(5)>80 and <95, RSI(10)>70 and <95
Seasonality is bullish for March (K) as well as for week 12 of the year (L).
Correlation (M) among S&P500 members is higher (>0.25) . Short-term we continue to see a significant expansion (RSI2>99).
Read more about my correlation related research here.
Market Breadth (N) for top performers is at high absolute levels and increased over the week, indicator value is at highest quartile. Intermediate-term trend of market breadth is weakening.
Sector setup (O) is bearish. The sector leaders are XLI (Industrials) and XLF (Financials).
RISK ON for the bond market (P). Generally this is positive for the stock market, especially with a combined setup (BONDS and DIRECTION).