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 50 and
Overall price action is providing a bullish environment (B-J).

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 (

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.