Summary: Seasonal patterns and market internals offer hope that the short-term bounce will materialize into stronger market action. However, markets need to get back over their 200-Day Moving Average or see the trend strength indicator (TSI) turn positive to confirm the readings.

Risk On

• The Dow, Nasdaq, and Russell closed marginally positive on the week with the S&P basically flat. (+)
• Volume patterns improved with the Nasdaq having more accumulation days than distribution. (+)
• More sectors closed positive on the week than down, with retail recovering while risk-off sectors such as utilities, staples were weak. Though, technology and semiconductors still lagged. (+)
• Market internals significantly improved with the McClellan Oscilator breaking its negative trend from January and turning positive. (+)
• The NYSE New High New Low ratio flipped to a buy signal from oversold readings. (+)
• The number of stocks above key moving averages dropped on Friday, though on the week it has been recovering off its lows and went above the 50% level. (+)
• Dr. Copper exploded to new highs, though it is overbought on the short-run. The Copper price increases don’t point to a recession. (+)
• The short-end of the yield curve supports Fed comments and points towards rates easing. (+)
• Seasonal trends suggest strength in the coming weeks for Nasdaq and S&P. (+)

Neutral

• Foreign equities remain strong overall with some new leadership from India and Brazil this week, while China was weak. This could signal some rotation back into the U.S. (=)
• The color charts (moving average of the number of stocks above key moving averages) is negative over the long-term, but the short-term is improving for the S&P and Nasdaq to a mixed-to-positive reading. The Russell remains negative over all time frames. (=)
• Volatility went down over the week, however, it remains elevated and we still have a positively stacked and sloped bull phase. (=)
• Value stocks continue to outperform growth. Value improved to a weak warning phase and its 50-Day Moving Average is back to sloping positive, while Growth remains under all its key moving averages. (=)
• Foreign equities are in bullish phases and outperforming the U.S., however, both emerging and more developed markets are running a little rich. (=)
• Longer-term rates still look mixed with concerns about the dollar and refinancing the debt. (-)

Risk Off

• The risk gauge slightly improved with the performance of high yield debt, though remains risk off. (-)
• The modern family remains overwhelmingly negative, though on the short-run, Semiconductors improved relative the S&P. (-)