Last week’s call worked out, again! The market closed above it’s weekly opening.
Setup for week 9 is positive, hence I expect slightly higher week. Though a bull-back in the range of 1% bellow the weekly open can be expected.
- Direction: long term up, intermediate-term up
- Volatility: very low, ranked long-term volatility bellow intermediate term volatility
- Trend-health: long-term trending environment (TSI>1.65) and intermediate trend conditions elevated.
- Channel: intermediate channel position low, higher than last week
- OB/OS: RSI(5)>50 and <75, RSI(10)>50 and <75
Seasonality is bearish for February, applying directional market filter the setup becomes rather bullish for (K-L).
Last week of February has a negative bias.
Correlation (N) among S&P500 members remains low (<0.25). Though short-term correlation trend has been going up.
Market Breadth (O) is up, indicator value is at highest quartile. Intermediate term trend of market breadth is trending down.
XLI (Industrials) and XLE (Energy) are in the leadership (P) position. That is a change from last week. For the setup I considered only weeks where the correlation (sector ETF vs SPY) is high.
RISK ON for the bond market (Q). Generally this is positive for the stock market, especially with a combined setup of DIRECTION & VOLATILITY.