Big View Bullets as of Feb. 9th
Summary: While ending the week largely flat, waning momentum and weak seasonal patterns hang over this market.
Risk On
- On a shorter-term basis, Value stocks continue to lead growth, pointing to a potential important rotation. It is critical that they both maintain their bullish phases. (+)
- Foreign equities improved significantly on the week, particularly compared to the S&P, and are right at their 200-Day Moving Averages. (+)
- Copper also had a significant breakout, bouncing strongly off of critical lows and going into a recovery phase. (+)
- The weekly charts in the four indexes are giving a positive read assuming the lows in January hold. (+)
- The long end of the Yield Curve eased this week putting the long bond (TLT) in a recovery phase and assuming we aren’t going into a recession this could be bullish for equities (+)
Neutral
- Market internals, as measured by the McClellan Oscillator are at neutral-to-slightly negative reading. (=)
- Gold closed at new all-time highs due to both political uncertainty globally and inflationary pressures persisting. (=)
- Three out of the four indexes were basically flat on the week after giving up most of their gains on Friday. Looking at pure price action, we have to concede things are looking a bit toppy when factoring in the waning momentum on our Real Motion indicators. (=)
- Soft commodities have been holding up well and is in a little bit of a compression range. If it can breakout of the recent highs, that would be a significant technical improvement. (=)
- Eight of the fourteen sectors we track were up on the week, which is slightly positive. The biggest standout, Consumer Discretionary (XLY) was the weakest, while Gold Miners (GDX) and the long bond (TLT) were both up. (=)
- The modern family points to an important rotation, with strength in Transports and Regional Banks, while the rest weakend significantly by Friday’s close. (=)
- Volatility readings rallied on Friday, though it could be viewed as a potentially muted response and is currently sitting on both its 50 and 200-Day Moving Averages. (=)
Risk-Off
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