Summary
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.
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Price Action
[bullish]
- 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
[neutral]
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
[bullish]
Correlation (N) among S&P500 members remains low (<0.25). Though short-term correlation trend has been going up.
Breadth
[bullish]
Market Breadth (O) is up, indicator value is at highest quartile. Intermediate term trend of market breadth is trending down.
Sectors
[positive]
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.
Bonds
[positive]
RISK ON for the bond market (Q). Generally this is positive for the stock market, especially with a combined setup of DIRECTION & VOLATILITY.
