Summary
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%.
Price Action
[bullish]
- 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
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Seasonality
[bullish]
Seasonality is bullish for March (K) as well as for week 12 of the year (L).
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Correlation
[bearish]
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.
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Breadth
[bearish]
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.
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Sectors
[bearish]
Sector setup (O) is bearish. The sector leaders are XLI (Industrials) and XLF (Financials).
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Bonds
[positive]
RISK ON for the bond market (P). Generally this is positive for the stock market, especially with a combined setup (BONDS and DIRECTION).
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