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Are we There Yet? Still tough to fade stocks, but getting closer

In the wake of this morning's horrific terror attack in Belgium, we see futures down around -0.40% in US, while between -0.50--75% in Europe, both have rallied off earlier lows.  WTI Crude has dropped off from earlier highs near 41.80 to 41.17, or down .35 cents, or 0.85% while Gold is staging a minor rally.  The US Dollar has firmed up a bit in the last couple days, which has coincided with some minor underperformance in the suddenly strong Materials sector, while Treasuries are seeing an expected Flight to Safety.

The following "COULD" be concerns,and need to be watched carefully-   1) Breadth has begun to pullback a bit from very extended conditions - This is seen both in the McClellan oscillator over the last week, along with the Percentage of Stocks above their 50-day MA that got up close to 90% in the NY COMP, nearly the highest since the Breadth surge from early March 20092) Pessimism has waned a bit further-  Might be expected of course, with SPX having rallied 13% without catching a breadth in the last 5 weeks, or up OVER 2% a week, and now we see that the Total Put/call ratio hit new 6 month lows yesterday, along with a monumental 50% drop in the VIX in a very short period of time.   3) SPX has officially reached "overbought" territory by another momentum gauge- RSI, which recorded readings over 70 the other day (not a sell signal per se, by any stretch, but worth noting   4) WTI Crude's recent rise has NOT been followed by a similar push higher in momentum, which is diverging a bit.. (often a warning sign that the trend is getting a bit ahead of itself)   (Worth watching very carefully given prior + correlation with stocks 5) Last week's Decline in TNX and USDJPY , which had both correlated quite positively with S&P.. Granted, both bounced yesterday, but are now giving up gains today in the flight to safety as might be expected(1.85% KEY for TNX)

However, the near-term negatives still haven't produced any trend reversal and we've seen a constructive SURGE out of Industrials with some signs of a few key Biotech stocks trying to reverse from lows as healthcare began to bounce yesterday(Another important piece of the puzzle, given its weight)  Overall, we might be close to a near-term reversal in stocks.. but we'll need to see proof.  and for now.  despite some early weakness..  that still really hasn't happened

Bottom line-  the weakness thus far hasn't caused any real technical damage to the trend from 2/11-  See the first chart below:

 

Minor stalling out a bit, but still no real trend damage-  Movement back above 2044-5 would likely cause a final surge before at least a temporary peak..  but broader trend remains in good shape

Minor stalling out a bit, but still no real trend damage-  Movement back above 2044-5 would likely cause a final surge before at least a temporary peak..  but broader trend remains in good shape

Resilient uptrend in S&P June Futures, and includes Tuesday's early weakness, which still hasn't violated the trend.

Resilient uptrend in S&P June Futures, and includes Tuesday's early weakness, which still hasn't violated the trend.

BOTTOM LINE-  We'll need to see a break of the 10-day MA, at a minimum on a CLOSING basis, currently at 2023-  Until this happens.  it's just difficult to make much of this early weakness and the warning signs listed above, as price remains the most important thing.  ALWAYS !.