Summary: The market sold off hard this week and for the month of February, with a shift from growth into value, though market internals are holding up on a relative basis. We expect continued volatility and headline risk coming out of Washington which includes both tariffs and geopolitical stress.

Risk On

• The Dow Jones Industrial Average( DIA) closed back in a bullish phase on friday bucking the selloff in all the other key US Equity indexes.(+)
• Large Cap foreign equities (EFA) closed strong this week, remaining in a bullish phase (+)

Neutral

• Eight of the fourteen sectors we track were down, led by technology and semiconductors. Though we did see some strength in financials and healthcare. (=)
• Value remains in a bullish phase while growth fell into a warning phase. Value is outperforming growth on a relative basis now in both shorter and longer-term timeframes. (=)
• The color charts (moving average of the percentage of stocks above key moving averages) are giving a mixed read on Nasdaq with neutral longer and mid-term readings while more negative on the short-term. S&P is somewhat reversed with more negative readings longer-term and shorter-term looking more positive. (=)
• The cash vix is in a bullish phase but overbought. (=)
• Emerging markets broke down hard under its 200-Day Moving Average while more established foreign markets held up better on a relative basis. (=)
• Soft commodities (DBA) got hit hard and are back in a warning phase and look like they may have topped, a good thing for the economy if food prices come off. (=)
• Gold backed off of its all-time highs and is trading closer to support levels. (=)
• Seasonal patterns tend to show weakness in early March before a reversal and on average a positive March over the last 10 years. (=)

Risk Off

• Three out of the four indexes closed under key moving averages with QQQ and SPY in warning phases and IWM in a weaker distribution phase.Our  Real Motion indicator is weak across the board on daily charts. Though QQQ, SPY, and IWM all reached oversold levels on our Real Motion indicator, indicating possible mean reversion opportunity.  (-)
• With the sell-off over the last two weeks, we only have 6 accumulation days across all indexes with 16 distribution days, an extremely negative reading for volume and the Friday rally was on light volume. (-)
• Considering the steep market sell-off this week, market internals are holding up on a relative basis with the McClellan Oscillator only at a negative -25, though negative overall and worse in the Nasdaq. (-)
• Risk gauges remain fully risk-off. (-)
• The new high new low ratio is fully negative in stack and slope and not overdone on the downside (-)
• All members of the modern family are under pressure. Semiconductors broke down hard and no members are currently in a bullish phase. (-)
• Bitcoin which we consider a good risk- on indicator when its strong,  got hammered , but held its 200-Day Moving average and bounced off the lows on Friday and still above its November breakout levels. (-)
• With gold and soft commodities selling off hard and pressure on the markets, bonds rallied. The Atlanta Fed is forecasting a negative GDP number for the first quarter. (-)