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Financials starting to drop off, joining Industrials as yields pullback hard

Into Europe's close, we've seen losses pared back a bit, with SXXP closing down 0.80% and SX5E down -.96%, but Germany's DAX still lower by 1.3%-    German Bund yields have dropped off hard down to .18 bps, or a full 5 bps today alone, while TNX is at 2.315.  IMPORTANT TO NOTE that Financials are beginning to rollover too now and JOIN the weakness seen yesterday in Industrials. and will CONFIRM DAILY SELL SIGNALS today for XLF under 24.47, which would invite weakness down to 24 or 23.70-   Breadth is only lower by about 3/2 negative but nearly 2/1 volume DOWN vs UP.. Utilties have been the big winner today and this week, outperforming every other sector, up 3.6%, followed by Telecom and Real estate and Staples, so the defensive positioning has grown substantially, while Financials industrials and energy have underperformed.  and (Financials looks to worsen now based on today).  BUT Financials and energy are the only 2 sectors for now that are down more than 0.50%, while utilities and telecom UP 0.50% or more.. so we'll need to see some additional deterioration in TECH before expecting too large of a selloff-  The Bond move in particular has been a bit severe this week, as Treasuries are moving in exactly the OPPOSITE direction which would be expected as the market moves into an important fed meeting next month where most think a HIKE SHOULD happen.  but chances still stand near 38%, so the market is NOT prepared at this time , for a hike..   Gainers today include FL, INTU, JWN, KSS, LB, FSLR, NWL, STZ, GPS all higher by more than 2%, while on the downside- RRC, SWN, RIG, HOG, HPE-  Let me know if I can answer any questions

UNDER 2353 on a close BEARISH- Bond yields likely to still trend down in near-term

The last few hours have brought about downside followthrough to yesterday's early pullback attempt with the S&P dipping down under prior yesterday's lows along with NASDAQ as US Futures have largely followed Europe which is lower by 1%, headed for the biggest decline of February (DAX down 1.6%) and still seeing Strength in Bonds globally, with US TY yields down to 2.36 and US Dollar index backing off further as USDJPY gets down to the lowest since early February-  Overall if this can hold today, this would suggest that the trend is in fact turning lower technically in the short run and allow for at least a bit of pullback next week .  A couple key sectors, as mentioned early this am, have begun to weaken with more on deck, that being Industrials and then Retailing as part of Discretionary, that make further weakness likely from these sectors while Financials and Tech are likely to join suit as all four sectors now have counter-trend sells and make up roughly 60% of SPX-  For today into next week, prices UNDER 2353 , yesterday's lows in S&P FUTURES is Bearish, while over holds off the decline a bit longer-  Areas of support under 2353 lie near 2346-7 and then 2332-6 area-  Increasingly though it appears like a defensive stance is necessary and under yesterday's lows for any length of time would allow for equities to backtrack a bit

Sector ETF Counter-trend sells are lining up, giving confidence that pullback is near

45 mins to go, indices have rallied back to unchanged and mildly positive in SPX, while still negative in NDX, CCMP by 0.35-0.45%  Important to note that the volume remains heavily tilted towards declining vs advancing issues by about a 3/2 margin, and while Financials and Tech have rallied back, other sectors like Discretionary and industrials HAVEN"T and their sector SPDRS remain a multi-day lows, with both in position to confirm short-term counter-trend sells-  Important to reiterate this, as XLK, XLI, XLY and XLF all have daily signs of exhaustion and given that they make up 60% of SPX, this in fact important and should tilt the odds towards a decline, or at the very least any resulting rally attempt will occur on far less breadth and set up a noticeable divergence to be sold into in early March-  Both Yields and Dollar showing some minor weakness, and USDJPY has begun to turn down a bit more sharply in the near-term and should be noted.. as Yen strength can often act to coincide with Global equity weakness- For today, the rally back doesn't turn the trend bearish, but we look to be very close with these setups, and gains should be used to take some profits and look to hedge into end of week

Move to multi-day lows shows a much different market now

nearly 2 hours in.. seeing some very different price action than the last few weeks, with the attempted breakout above 2365 failing and now giving back over 10 handles in the last couple hours. At current levels we could potentially form an ENGULFING PATTERN compared to yesterday, and would be the first time potentially that SPX , NDX and NAS COMP would close UNDER prior days lows since late January which is important in signaling a slowdown to this move- (Despite industrials weakness, DJIA has NOT done this yet)  Breadth went from nearly 3/1 positive to negative since today's open and still seeing some weakness in the US Dollar index along with rates, which tends to be an explosive combo for Gold-  Todays' rip helping to recover around 50% of the entire selloff from last July, and getting stretched short-term while Crude continuing to make upside , in following suit to what happened back on Tuesday- Financials, Discretionary, and Tech down 0.50% while industrials leading the decline today , lower by 0.90% as stocks like URI, R, CAT, FLR, FLS are all lower by 2%.  Signs of NASDAQ turning down vs SPX are evident, while the Russell 2k has been underperforming broader market since mid-December- KEY TO NOTE:  XLY, XLF and XLI all have countertrend sells in place today, and XLY, XLI could confirm those today, while XLF would require a bit more weakness, but is expected.  For now, into Europes close, S&P fell under yesterday's lows but has since rallied to hold this for now. but this afternoon will be the key-  However today should serve as at least a warning of a move like this could happen in the near future which should extend-  For now, its early to make that call, but watching the action in the indices carefully

Bond yield decline shows market doesn't believe Fed's hawkish rhetoric

gm- Jobless claims largely inline- 244 vs 240k-  Ongoing signs of resilience with equities, but no real net change for the last couple days- Bond yields continuing to trend lower , not really suggesting the bond market believes the Feds hawkish rhetoric on hiking next month-  the US Dollar had stalled a bit following Mnuchins earlier talk while Gold turned back higher to multi-day highs.. and in the short-run, Gold and metals can outperform, but getting close again to resistance areas to sell into next week- WTI Crude meanwhile pushing back higher and still looks to show strength-  Overall with S&P  OVER 2365 would drive S&P Futures up to 2372-6, while UNDER 2355 would drive prices down to 2336 area, a more serious area of support-  For today. Financials should be watched carefully for any evidence of peaking out, as counter-trend sells will be in place on XLF for the first time on daily charts since this February rally began-  VIX continues to show resilience and that is also something to note-   Early movers this am: CBMX, CRI, AVEO, SQ, CTRP, RIG, NOV, OCLR higher while LB, ARRS, JACK, CLD, APAM, DRYS, NVDA lower-  let me know if you have any questions

Equities inching higher into FOMC

Equities have held steady through the day, ,now inching ever higher towards FOMC min release with bond yield having backed up throughout today's session- We're still seeing MORE stocks declining than advancing today, around a 3/2 ratio with Energy industrials Real estate all down more than 0.50% while only Materials are higher by more than 0.50% and 6 sectors down for 5 being up-  GETTING UP ABOVE yesterday's 2365 WOULD be a temporary positive for today heading into tomorrow, and tough to short into this if this happens until near 2374-6 area-  As stated.. we'll need movement down UNDER 2349 to have any conviction of a decline-  for now, Dollar fairly steady, having gained back some of earlier weakness vs Yen.. but tough to make too much of equities as being good risk/reward given current overbought conditions, resilient VIX, and sentiment shifting more and more bullish into next months meeting-  For today.. key level will be whether equities turn DOWN after FOMC min if not as hawkish as expected.  Fed fund fututres showing just 38% now as chances for a hike-  Let me know if you have questions

Stocks, bonds rising in Unison- Upside should prove limited

Upside should prove limited in US Equities & the key will be pullbacks down UNDER 2349 initially and then 2336 which would result in a correction down to 2300 or slightly below-  Factors like overbought conditions, Demark sells, sentiment, seasonality and negative momentum divergence all important as well as seeing defensive strength in the last day of rally which is odd and this minor sector rotation often can be telling that recent Index strength could be near complete.  For today, we're seeing just fractional weakness in US Equities while Dollar still rising this am, but some increased Yen strength has tapered those gains, while Yields are still falling-   So in the past few days we've seen both stocks and bonds rise in unison-  Important to be selective in the days ahead, but Financials should be what to watch, given that the spike in yields initially led Financials and equities as a whole higher, and even on the yield pullback in the last few days, Financials really haven't followed suit-  Between now and end of week, important to watch for failure under 2349 on a close-   Early gainers for today:   SRRA, GRMN, TOL, DEPO, TRVN, while GBT, PKD, CRTO, WLL, GOGL, FSLR, CSIQ, TRIP, YUM, CLF, UPS all lower-   Let me know if you have questions

Pullback not sufficient to think this extends with All major sectors positive

Into mid-day, weve seen just a minor backing off from earlier highs, Most of Europe closed up by 0.65-0.80%, but Treasuries have reversed earlier losses and now yields are roughly unchanged, both here and in Europe, which is a minor positive for Treasuries in thinking yields probably can continue to trend a bit lower in the short run.   Financials have backed off a bit as has Energy, but still seeing all 11 sectors positive on the day with Energy still leading, and both Real Estate and Staples higher by 0.75%, while Materials is the only sector higher by less than 0.30% on the day-  For equities, we would need to see prices pull all the way down to get under 2249 to have doubts about today's move and then under 2236 more meaningful-  For now, despite the various issues, it IS a constructive price move, but breadth has contracted a bit to about 2/1 bullish, from earlier 3/1-  Gold has managed to recoup early losses given yield pullback and still seeing Dollar with outsized gains vs Euro (.60%) but to a lesser extent vs Yen (0.39%) .  Autos, energy and Food Staple retail all higher by .95-+% today, while only Pharma/Biotech and Life sciences Negative among the Level 2 sectors -  Let me know if you have any questions

Prices have surged above last week's highs, stopping Shorts

Around 90 mins into trading, index prices have moved up aggressively to exceed former highs from last week, , and getting above 2356.75 as well as 2360 stops out trading shorts, and while this doesn't mean its right to establish new longs at current levels, it's proper to await some evidence of reversals taking place before betting again the trend with no evidence of any About-Face-   VIX is still holding up resiliently above highs made in late January and this entire February advance has NOT caused implied volatility to fall to new lows-  RSI has risen to 80 on Daily charts, which is Above the highs seen post election when equities rose 10%. and also has JUST exceeded 2/15 highs of 79.87 area.. so after a sharp price rally, momentum had been below up until this morning- The 2 key developments from earlier are still holding gains, in both WTI Crude and in US Dollar index and yields remain higher with German bunds back up above .315 while US 10yr yields are at 2.434-  One addtl market to note-  Japan attempting to break back out to new highs above Dec-Feb consolidation, which is more apparent in TOPIX than in the price weighted NKY, but with USDJPY on the rise, ETFs like DXJ help to hedge against a declining Yen and appear to be breaking out as of today's close-   For today, Energy, Staples, Discretionary all showing more than 0.75% gains while Healthcare, Tech and Industrials are the 3 sectors all UP less than 0.50%-  So the sectors that are leading in YTD performance are up the least.. while this years WORST performing sector- energy, is outperforming, largely on Crude gains.  Breadth showing about 3/1 positive-  To think a bearish view is back on the front burner.. S&P will need to reverse early gains and close down under 2346 at a minimum, but really under 2336.

Crude rally and USD surge both important for today

2 important moves to note this am-  WTI CRUDE stretching above highs of the past month, reaching the highest levels since early January, as Citi's higher forecast talking about effects of >90% OPEC enforcement of Output cuts likely not having been realized by market- US Dollar also pushing higher in a manner that suggests this recent pullback attempt could very well be complete-  Thus far Dollar rebound attempts have had little effect on commodities but increasingly hawkish rhetoric and/or stronger Eco data in the weeks ahead that lift the Dollar and Rates likely would have a much more detrimental effect, particularly on precious metals-   RE: Equities, S&P prices a few ticks under Friday's highs and while this looks to be a good area to sell into this move.. we'll need to see some evidence of earlier overnight lows being breached before expecting more meaningful acceleration. so 2349 initially important and then 2336-40 area-   2356.75 can serve as stops for shorts on an hourly close, as this would lift prices to 2360-2 and potentially up to 2375.. but upside at this point should prove limited given the start of more meaningful momentum waning and divergence of late in severe overbought territory with counter-trend SELLS on charts of many timeframes-  Advancing issues for this am: CLF, WMT, EYEG, GOGL, KINS, EXAS, EW, CEMP, GRFPN, MDLZ, while on downside : TRVN, DRYS, FCX, KHC, MNTA-   Let me know if you have any questions

Fractional losses, and churning, but weekly chart still shows good gains

Fractional losses with 3 hrs left til the holiday weekend- S&P thus far has held up fairly resiliently thus far, not revisiting earlier lows, and despite a couple days of churning, the weekly chart at current levels would finish near its highs the best weekly close and performance of the year.. Meanwhile, Treasury yields will close down near its lows for the week after reversing hard on Wednesday..  Breadth is about 2/1 negative for today with Energy leading all sectors lower, and only Consumer Staples at this point is positive for today-  Overall, not too much change from shortly post Open, but trend still looks vulnerable given the combination of Demark sells, overbought conditions, and negative seasonality next week and for the month of February-  Breaks down UNDER 2336.50 are what to watch for this afternoon and into early next week which would cause downside acceleration-  For today thus far, KHC, DVA, SWKS, VR, KMB, CL, all all outperformers, higher by 3% or greater while CPB, UNH, FLS, GIS, AKAM SCG are all down more than 3%- let me know if you have any questions

Yesterday's lows tested early on, will be key for Friday

2 key things to note- First- S&P has pulled back to test yesterday's lows again, and 2336.50 will have importance for today as support, having been tested now once already, Under leading down to Wed lows 2331, which when broken should lead to acceleration down to 2300 and slightly below-  Second- the pullback in Bond yields is continuing this am with 10yr back down to 2.40% and could have a negative impact on Financials while positive for the yield centric groups in the short run- Overall, most of Europe is negative with Spain, Italy and France all down more than 1%..The Dollar is weak vs the Yen which also should have some importance and Gold looks likely to extend higher-   For today.. watch 2336.50 and then 2331 on the downside while resistance lies at 2347, the overnight highs- Early movers in TRUE, ANET, KHC, DE, FCX, while on the downside- K, ALV, UNH, HTZ, and MDLZ-  Let me know if you have questions- ty

 

Bounce into mid-day, but Stocks remain vulnerable to pullback in the PM

Just past Mid-day, we're seeing indices hold losses for the most part, up slightly from earlier lows-   Breadth is not too negative.. only around 3/2.. but Energy, Discretionary continue to lead to the downside, but a -0.40% pullback in Financials is much different than what's been seen in recent days and Yields trading lower goes a long way towards explaining this-  Tech still quite resilient and POSITIVE on the day, while Utes, Real estate and Telecom all up-  For this afternoon, really want to see at least a move down UNDER yesterday's lows to have more confidence that a pullback is underway and for now, not too much selling thus far, but will cause momentum to slow a bit on the upside-  UNDER 2326.25 by Friday's close will officially confirm a sell signal for S&P futures, so that is what to watch there-  Gold looks apt to move a bit higher over next 3-5 days and GDX has begun to stabilize.. so this looks attractive to buy into next week as Dollar settles a bit-  

Yield stall out could affect Financials negatively in the short run

Markets showing some mild weakness which hasn't changed much post Eco data this am, with Housing start data- 1246 vs 1226 and jobless claims 239 vs 246 k expected.  Europe down the 1st day in 8 and Asia Pacific index , while up 0.50%, still showed more stocks DOWN than UP today-  NO CHANGE In thinking on equities in general which are stretched and poor risk/reward for longs here, anticipate we do stall out between now and Monday of next week.. but the key will be 2339-40 and then getting down UNDER 2331 which would violate this minor uptrend since the Feb 8 lows ..  YIELDS could play a big part in this and appear to have stalled out near-term at 2.51% so this might serve to help Financials also stall and consolidate recent gains.. but for now, Financials remain attractive and dips should be used to buy in the next 1-2 weeks if given the chance-   US Dollar down today vs Yen, Euro, roughly 0.50%-  Premkt movers:  TYHT, NVAX, NTAP, XON, ALXN, RAD, RUBI while on the downside- CFMS, GNC, BBW, MOH, TRIP, MGM, MML-  let me know if you have any questions

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Yields up near initial resistance while Equity rally stalls into mid-day

Rally attempt off lows, which briefly got above overnight highs, is now stalling a bit into mid-day and the real key for this afternoon will be getting down UNDER 2331 for the Bears, which would take out earlier lows as well as violating the uptrend from 2/8.  Breadth is flat, but still seeing a lot of strength out of the Financials, which at 15% is important and positive for the market after the recent breakout.. while Healthcare and Staples also showing good strength-   Most of Europe finished up 0.50%..  Yields look to have held the 2.51% resistance that was challenged early on, while the US Dollar has reversed early gains, and Gold is higher by 8 points or 0.65%.  While negative divergence remains a factor on hourly charts and 2 hr.. the market could in fact get stretched even further if Financials continue to move higher.. so this is something to watch carefully, as this move doesn't yet look complete. For today- ENDP, ,FLIR, NRG, ADI, LUV, WYN, MYL all higher by 3%.  and on the downside-   AIG, CF, DVN, HP, RIG, FCX, all lower by more than 2%-  Let me know if you have any questions

Sharp gains in Europe, Asia: Today should bring about counter-trend Sells for US Equities

Wed showing sharp gains in Asia and 0.50% upside in Europe which is largely playing catchup to yesterday's US finish in stocks.. US futures meanwhile mildly negative and very stretched here, showing mild negative divergence on intra-day charts as momentum is no longer able to catch up to price-   Dollar fractionally positive while Rates have pushed up again for the 5th straight day, and today's CPI data will be important for 10yr yields and to justify a rate hike next month as the market thus far is only pricing in 34% chances-   Technically stocks are quite overbought at current levels and from a trading perspective, I favor a short bias here thinking that upside is limited and S&P should begin to consolidate some of these gains-  Demark indicators have appeared on daily and intra-day charts of many US indices and sectors while also appearing on Emerging markets ETF- EEM and also as BUYS on the VIX as of today-  So upside does look limited technically until markets can alleviate some of the recent overbought conditions.. First support lies down at 2328, then 2325, with a move UNDER 2319 in FUTURES serving as catalyst for the start of this decline technically down to 2300 and below-  For now, all eyes on CPI data at 830- Premkt movers thus far : SODA, LPTH, GRPN, SEDG, RH, HUN, SIRI, ANGI, TWTR, OLED, AAL, LUV, DAL, A all higher, while on the downside- FOSL, PLAB, LC, HOLI, GOGL-  Let me know if you have any questions

Equities stretched and very close to stalling out in the short run

Mild losses across the globe, where Japan is down by 1% and we're seeing a bit of reversal out of the US Dollar vs many majors as WTI crude and gold both show fractional gains-  Treasuries continuing recent selloff and upside for yields should be capped near 2.51 in the short run.  In equities, Key for S&P will be 2332-3 and one should look to sell into that, whereas 2323 marks support of the past week.  Until this level is taken out, one can expect a bit more upside potentially up to this 2333 area, but should be on guard for any evidence of trend reversal at this point which I think should happen sometime this week. Premkt gainers in CGA, AGEN, STNG, GM, FRAC, DRYS, FCAU, while GEVO, PFLT, PLX and PLKI all down -  Let me know if you have any questions

30 mins til the Bell- Hourly charts still suggest possibility of final push above 2330

30 mins to go.. S&P fading a bit, but nothing too dramatic after very sharp surge back to just under 2330, making a minor peak about 2 hours ago-  TREND VERY close to exhaustion here, but hourly charts can still allow for a final push right over 2330, and would be right to short into this tomorrow-  VIX holding up well above last Friday's close despite market being higher and still only Financials being the sole sector higher by more than 1% while industrials up 0.90% and healthcare, Tech both higher by 0.60%.  BREADTH only positive today by around 3/2 but Telecomm and Energy the two sectors down, s a bit of improvement today from Staples, Utes, REITS but all of these remain laggards- .For now.  right to flatten out and use any final push tomorrow over 2330 to short into futures, and/or consider hedging, while looking to buy implied volatility into the close today/tomorrow, thinking the market should be pretty ripe for reversing, despite the Financials breakout

Equities remain bullish, & China extends recent breakout

Global equity strength continues with most of Asia continuing recent China breakout-  Europe rising for 5th straight day, the longest trend of the year.. while US futures mildly positive. and key upside resistance near 2318, with over leading up to 2323-6, a better area to consider selling into this move-  For early in the week, Upside limited, but still could have a positive first couple days before stalling out and giving back some of recent gains-  so trend stretched, but still no real evidence of selling and best to keep trailing stops and look to sell into strength into Tues/Wed-   This week we'll see Yellen testimony which could be important in her trying to prep the market for a possible March rate hike, in offering more hawkish testimony.. as other Fed governors have suggested rate hike could happen, but market still not ready, as fed futures show just a 30% likelihood- US/Canada meeting today also potentially important, as Trudeau coming to DC to meet Trump-  while inflation data back on the forefront with US data this week along with UK tomorrow-  Overall, Equities bullish but overdone, important to be selective, and expect reversal sometime this week, so good to sell into strength- Yields and DXY still pressing higher- and both Gold and oil lower - Saudi Arabia telling OPEC it cut output by the most in 8 years-  early morning GAINERS in PLX, IMMU, PLUG, PIP, TEVA, M, CLF, CRNT, while on downside- HAIN, and PERI-  Let me know if you have any questions

Change of Trend near for US equities- Sell strength into next week

good am, Change of Trend Near for Equities-  Look to sell into strength today/Monday for possible trend reversal early next week-    For this am- ahead of Import price data and UMich Sentiment.. seeing US equity futures up along with most of Asia, while Europe is largely mixed-  Dollar and Bond yields rising again and Precious metals dropping, something that's likely to continue in the near future- Japan finished up 2.5% and China followed suit also in its breakout from a couple days ago-  Key levels for today- S&P up at 2311-2, above should drive to 2319-20 while 2292 important as early support- but most Demark indicators won't be perfectly aligned til early next week and should pay to stick with the current trend-   Early movers in SHLD, SKX, ATVI, OCUL, MJN, FCX, IPG AMD, while on downside- ONVO, YELP, BTX, CLF, DEPO and TWTR-  Let me know if you have any questions