Last week’s call worked out almost as predicted: “sideways move with the low in the range of 1-2%”. We saw the low of the week bellow 1.18% of the opening. The week closed with a loss of -0.4%.
Setup for week 13 is positive, hence I do expect a higher close. In case we see a pull-back it certainly won’t be a deep one (max 1.0 %)
- Direction: long term up, intermediate-term up
- Historical volatility: long-term low, short-term rising
- Trend-health: long-term trending environment (TSI >1.65) and intermediate trend conditions are high.
- Channel: intermediate channel position bellow mid-point.
- OB/OS: RSI(5)>50 and <75, RSI(10)>50 and <75, intermediate term time stretch bellow mid-point.
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>95).
Read more about my correlation related research here.
Market Breadth (N) for top performers is at high absolute levels and decreased over the week.
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).