Free

Going It Alone: The Nasdaq's relative strength is eye-opening against the major benchmarks, which in itself is a good thing, but can it really do all the heavy lifting? Below one can see the sizable differences as it is now higher by double digits again YTD after a powerful last week rallying more than 4%. The tech-heavy index is the only one of the quartet above its January highs, and the Russell 2000 and Dow Jones Industrials are now negative for 2023. The latter of course is outdated with just 4 of the 30 names in the PRICE weighted average true industrial names in BA CAT HON and MMM. Many will say that the "rolling" bull market is healthy as different sectors take their turn demonstrating leadership, (not too long ago we were speaking about just how firm the industrials were acting). Currently, nothing is "rolling" anymore, and in fact, on a one-month look back period the XLK is the only one of the major 11 S&P sectors in the green. This to me speaks of others needing to pitch in, because eventually, they come for all the groups. Tech is giving others a chance to catch their breath. Will they take that opportunity and recharge?

"The trouble with the world is that the stupid are cocksure and the intelligent full of doubt".  Bertrand Russell Could This Be The Beginning Of The End? Savvy investors always consider one thing paramount. Preservation of capital. Risk management. Gains tend to take care of themselves if left alone after a well-thought-out strategy, but losses if not tended to can spiral out of control. Below is the MONTHLY chart of the Nasdaq, and it may be a little early to be looking at it less than halfway into March, but its shortcomings in finding any resolve springing of the MONTHLY 50 SMA is and has been concerning. It is now almost one year of clinging onto that line, plenty of time for bulls to get their act together in my opinion, and resume an uptrend as it did on rare touches 3 other times during the last decade. I put a MONTHLY ratio chart comparing the VEU, the Vanguard All World Ex ETF, against the S&P 500. Could a break above the downtrend be upon us (the daily ratio chart shows a clear uptrend for VEU since November)? Could Mike Wilson be correct with his 3000 S&P 500 target (round number theory)? The United States' superpower status is fading fast and that could be translated via softer domestic stock market PRICES going forward.

“Sometimes when you’re in a dark place, you think you’ve been buried, but you’ve actually been planted.”  Christine Caine New Beginnings? Could the above quote be attributed to nascent bulls that feel like they have found new life as of late? While we are impressed with the move technology has made overall, below is the chart we will focus on of the S&P 500. It is one of the most widely followed benchmarks, and how many are judged by their performance. Does that old phrase "time in the market beats timing the market" come into play here? Remember the reason why it is so hard to beat the S&P 500 is that it holds onto its winners (sure it reshuffles a few names every year but you get the idea). The bulls have a reason for a bit of optimism here as the S&P 500 continues to make higher lows since last October. It recorded a bullish engulfing candle last Thursday off the 200-day SMA, and it is uncanny how this secular moving average has played such a simple yet vital role. It was resistance, last March-April, August, and last November-December. Now it is looking like support, but more importantly for the first time in a year the slope of the line is starting to flatline, and that may be a vital clue. It is how many a market prognosticator determines its true trend. 

Yields Ebbing? Some intermarket relationships lose their lust as time passes and too many key in on them. Others remain intact and the chart below shows the negative correlation between the ten-year yield and Gold. We know the latter has not performed, which it is supposed to do in an inflationary environment. But if yields are really topping here, of course, we will not know until hindsight, perhaps gold will start to glitter. The TNX Friday recorded both a bearish evening star and island reversal all in one while doing so just after a breakout. Very often a failure so soon after a breakout is a red flag. If gold names can start to shine, pun intended, that would put another feather in the hat of the strengthening materials space. The GDX rose every day this week rising 6%, and ending a 6-week losing streak, and if it can CLOSE above 30 in the near term that would negate a possible bearish head and shoulders pattern. It helped the XLB to be the best-performing major S&P sector last week up 4.2%.

King Dollar: The greenback is on the move again, upward this time. After a bearish WEEKLY shooting star candle below to end Q3 2022, the dollar never went higher. Fast forward to the 3 weeks ending 1/13-27 which all CLOSED very tautly (those same 3 weeks the UUP CLOSED within just 3 pennies), all within just .23 of each other and we know that type of tight consolidation often leads to violent moves. The fact that the week ending 1/27 was a doji which is adept at signaling a trend change from the prevailing direction was even more reason to believe the prior selling pressure was genuinely abating. Since the start of 2022, opposite from 2021, the dollar and the S&P 500 have been trading in an inverse fashion. Will we return to the regime of 2021 where both rose together? Most likely not and on the USD MONTHLY chart one would see how persuasive the par number was dating back to 2015. On its daily chart since the bullish piercing line candle on 2/2 as the dollar rose the S&P 500 faltered. On all 3 time frames, the dollar looks compelling. Will the WEEKLY 50 SMA give the market a reprieve here? Next week's candle should be very informative in the direction of the dollar into the first half of 2023.