“The Bull trend is still North on the rotation” — Paul Ebeling
My work still shows the benchmark US stock market indexes are Bullish with a Very Bullish bias in here as investors reduced their hedging exposure and are shoveling huge amounts of money into equity funds.
What happened last week
Last Friday was Quad Witching and the Quarterly rebalancing took place on high volume. Our hard and rule is no trading 3 days ahead and 3 days after options expiry.
The Technicals ahead of Quad Witching
S&P 500 fell from a new high to near the 20-Day EMA as volume rose to above-average marks. The index then moved to a higher high. It broke lower Thursday as volume rallied then fell back below the mid-February high. The SPX is still putting in new highs and higher lows. Watching to see if it breaks the trend later this wk.
The NAS gapped down from the January highs to just over 13,000. This mark is important as the NAS tested it in late January after breaking to a new high. The index tested this mark again in late February before the sellers came in again. That late February hold at 13,000 set the bottom of a right shoulder to an inverted head-and-shoulders pattern. Now, the NAS is there again, and if it holds and reverses from there, this will be very positive.
What to expect this week
Shayne and I have being paying close attention to the benchmark Treasury 10 yr yield, which has been spiking from time to time.
That being the case, we believe that the market is going to continue to be very volatile, but the S&P 500 want to go higher long term. It is just a matter of time before the Fed steps and if interest rates get out of control, so that the SPX is going to head towards the Key 4000 psych mark, attack it 3X and break out to 4250.
Have a healthy week, Keep the Faith!