March is key price and time period
The SPX finished the
week at 1289.45, +0.2%, while the Dow diverged at -0.5% to11,062,
Nasdaq, -0.2% to 2287 and the SMH, +0.1% to 41.26. Year-to- date, the SPX and
Dow are +3.3% and the QQQQ, +2.1%. The intraday highs for the SPX last week were
all above 1290, but the 1294.90 bull cycle high was not taken out. That should
happen these last two days of February and first few days of March. NYSE volume
fell to 1.43 billion shares on Friday with the volume ratio 59 and breadth +675.
The short-term/oversold condition was reduced with last week’s sideways action
and the 4 MA VR is now 52 and breadth +301.The primary sector/group leaders last
week were energy, financials and biotechs, while the semis, cyclicals and retail
finished red. In fact, all three are also underperforming the SPX, +3.3% YTD.
The SMH is +0.8%, RTH +0.2% and CYC, +1.0%. The leaders YTD are the XBD, +14.3%,
XAU, +9.7%, OIH, +8.7% and XLE +6.6%. That is not a vote of confidence on the
economy by the Generals.
We now have month-end and potential early March
new money. It is significant to note that March is a key time period and has
produced many intermediate highs and lows since the March 2000 bull market top.
The next reversal will be to the downside, so there is no reason to be a
position hero right here. The major averages continue to rally into negative
news and normally that would be good, but at this point in the cycle it looks
like artificial stabilizing by the Fed and its gang to hold the major indices up
in the face of geopolitical events. It seems as if the Fed’s admitted
intervention in 1987 has become more of a regular tool rather than a last
measure of protection in the financial markets.
Traders in the SPY/ESH6 had good days on Thursday
and Friday with the Trap Door, and followed by the RST on Friday. The
Trap Door is a key reversal strategy, especially in conjunction with the
1-day volatility bands and Fibonacci extensions/ retracements. The
RST is “The Reversal Strategy” for all time periods.
If you have not protected any or all of your
long-term index proxy or equity positions, then good luck on your mission,
because this is the last red alert I will flash.
Have a good trading day,
Kevin Haggerty