The fattest global equations from…

Market dip buyers were active for much of the past week as the economic data was much stronger than anyone expected. Retail Sales, in particular, were surprising, reporting 5.3% instead of the expected 1.2%. The Empire State Manufacturing Register came in at 12.1, (expected at 5.9) and the Philadelphia Fed Manufacturing Index came in at 23.1 (against the expected 19.2).

The nearly hour-long schedule of the S&P 500 shows it was a wild ride. The S&P 500 was high at 3950.43 in the first hour of trading on Monday but then closed the day slightly lower at 3932.59. The pattern was reversed on Wednesday, as the S&P 500 opened lower and then closed near the highs. This was also the pattern on Thursday, and the weekly low was broken before stocks turned higher.

However, with yields on Friday, buyers dipped a bit more cautiously, as production on the 10-Year T-Note closed at its highest level since February 24, 2020. Since the beginning of the year, yields have up 0.91% to last week’s end of 1.34%. The rapid rise in yields could express concern among investors, despite seeing similar levels in February 2020.

Most of the lower markets closed for the week, although the Dow Jones Industrial Average was up 0.8% while the Dow Jones Industrials were up 0.1%. The big losers were the technical stocks, like the Nasdaq 100

NDAQ
it was down 1.6%, while the SPDR Gold Trust lost 2.2%. Both were injured by higher yields.

For the week the iShares Russell 1000 Value ETF (IWD)

IWD
went up .20% while the iShares Russell 1000 (IWF)

IWF
down 1.7%. Higher rates gave other stocks such as the Select Treasury Finance (XLF) a boost

XLF
it went up 2.8% for the week.

In January, I reviewed the data from Bank of America’s global asset manager’s monthly survey, which showed that asset managers were taking a high level of risk and their money levels were very low.

In the latest survey, conducted from February 5-11, they are even more bullish. The financial media has gone wild above what was announced from BofA’s

BAC
Michael Hartnett said “[The] the only reason is to be bearish … there is no reason to be bearish. “The allocation for stock is at its highest level since February 2011.

Spyder Trust (SPY) daily chart

SPY
showing that it gathered in the first part of February 2011 and reached a high of $ 111.39 on February 18, 2011. By the March 16 low (point c), the SPY had fallen 6.9% in seven days ten. According to data from the American Association of Individual Investors (AAII) the Bullish% went from 51.5% on February 3, 2011, to 28.5% on March 27.

On the chart, it is interesting to note that, on the second and third days of the recession in February, the SPY fell below the band (point a). As is often the case with using starch bonds, the SPY was then reversed for several days (point b) before resale began. This kick provided a great opportunity to sell ships or establish short positions. In early May 2011, the SPY was making new highs.

Returning to the present day, the QQQ Invesco Trust (QQQ)

QQQ
it made a new high of $ 338.19 on Tuesday, but then fell to a low of $ 328.36 on Thursday, as the 20-day exponential moving average (EMA) at $ 328.83 was reached. The daily support (line a) was broken short at the end of January, and is now at $ 325.55. The low at the end of January was $ 312.76, which is now the support level to watch. There is also long-term support at $ 303.07 (line b).

The Nasdaq 100 Advance / Decline made a new high on Friday, February 12. It has now pulled back, but is still above the weighted moving average (WMA). The A / D line has its first support at the end of January with more significant pressure at the uptrend (line c). The daily On Balance Volume (OBV) did not make a new high with the A / D line, and has fallen below its WMA. This indicates that the number on the decline increased late in the week. The next support is at the high of October 2020 (line d).

Crude oil closed slightly lower last week after making a new rebound high. As I said last week, this market is pretty much upside down. Gold, on the other hand, has been declining, as indicated by last week’s 2.2% decline in the Spyder Gold Trust (GLD)

GLD
.

Comex Gold futures contract was down 2.5% last week, falling below December lows. The 38.2% Fibonacci support from August 2018 is low at 1728.4, which is 2.8% below Friday’s close. The 50% support is at 1620.4, and corrections often end up between the 38.2% and the 50% support levels. The 20-week declining EMA is now at 1841.8, which represents strong resistance.

Comex Gold’s weekly OBV definitely broke the uptrend (line a) at the end of January and is now in clear recession. It is also lower than the declining WMA. The Herrick Payoff Index (HPI) is a key indicator in determining product price management. HPI Comex Gold fell below the zero line on January 15 and then broke its support from the 2020 low (line b). The daily OBV and HPI (both not shown) have not yet reached new levels with gold prices, so I am keeping a close eye on the performance in Comex Gold and GLD.

My view remains that a deeper recession is needed to reduce the high level of bullishness and complacency in the market. So I would raise money ahead of correction. The market may move even higher before a correction is made, but there is likely to be one next month. That decline should be a good buying opportunity for ETFs and selected stocks.

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