The S&P closed down for the 6th consecutive week. It closed on Friday down another 2.4% and is now 16.4% off the ATH. The S&P dropped almost 6% at one point during the week making a low of 3855 on Thursday. Priced closed the week on a positive note, however, bouncing 2.36% on Friday. Price now sits 4.1% off the recent low, but still below the 9/21 ema cloud and the Neutral box.
Going into this week, despite the rally on Friday, by bias remain bearish. All rallies at this point must be seen as corrective moves within the context of the broader down trend. My bias will remain bearish until price can reclaim the 9/21 ema cloud and move back above the Neutral box. My target for the current bounce was the 9 ema which was almost attained on Friday. If price continues its relief bounce this week, I will expect resistance at the 9 ema. If price manages to break through the 9 ema my next target to the upside will be the bottom of the neutral box and the 21 ema. If the selling resumes, I expect a re-test of Thursday’s low at 3855. If the low is broken to the downside, I will look for support at the 1.618 fib extension at 3805. Below the 1.618 a deeper move to the long term 382 Fib retracement and the 2.24 Fib extension at approx. 3500 would be likely.
Now that the Feb meeting and CPI data are out of the way focus is likely to return to earnings, the war in Ukraine and the price action of the Mega Cap stocks. We have seen a sell off in all asset classes already. Growth, Small & Midcaps, Bonds, Crypto have all been hit hard. The final domino to fall would be Mega Caps. If they roll over further, strong algorithmic selling would take place given the weight that many of the names such as AAPL & TSLA have in the INDEXES/ETFs. Many ETFs are built from other ETFs and are rebalanced automatically depending on Market cap and price momentum. There is a big risk of a cascading effect if the Mega Caps sell off significantly. The good news is that this effect can work in both directions.
WEEKLY EVENTS
Monday Fed’s William Speaks & NY Fed Manufacturing
Tuesday US Retail Sales, Industrial Production & Fed’s Bullard Speaks
Wednesday US Housing Starts, Canadian PMI & US EIA Crude Inventories
Thursday ECB Minutes & US Jobless Claims
Friday Baker Hughs Rig Count
NOTABLE EARNINGS
Monday NIO, TTWO, SSYS
Tuesday HD, HUYA, JD, SE, WMT, WB, DOCS
Wednesday LOW, TGT, TJX, CSCO, BEKE
Thursday BJ, GOOS, KSS, LSPD, VIPS, AMAT, DECK, PANW
Friday DE, FL
BULLISH NOTES
Potential bullish momentum
Oversold conditions
Potential de-escalation in Ukraine
Further pull back in bond yields
USD Weakens
Mega Caps hold support
BEARISH NOTES
Hawkish talk from Fed Heads
Escalation of the war in Ukraine
Continuation of inflationary pressures
Bond yields continue higher
USD continues to strengthen
Continued Weakness in Mega Caps
Going into this week, despite the rally on Friday, by bias remain bearish. All rallies at this point must be seen as corrective moves within the context of the broader down trend. My bias will remain bearish until price can reclaim the 9/21 ema cloud and move back above the Neutral box. My target for the current bounce was the 9 ema which was almost attained on Friday. If price continues its relief bounce this week, I will expect resistance at the 9 ema. If price manages to break through the 9 ema my next target to the upside will be the bottom of the neutral box and the 21 ema. If the selling resumes, I expect a re-test of Thursday’s low at 3855. If the low is broken to the downside, I will look for support at the 1.618 fib extension at 3805. Below the 1.618 a deeper move to the long term 382 Fib retracement and the 2.24 Fib extension at approx. 3500 would be likely.
Now that the Feb meeting and CPI data are out of the way focus is likely to return to earnings, the war in Ukraine and the price action of the Mega Cap stocks. We have seen a sell off in all asset classes already. Growth, Small & Midcaps, Bonds, Crypto have all been hit hard. The final domino to fall would be Mega Caps. If they roll over further, strong algorithmic selling would take place given the weight that many of the names such as AAPL & TSLA have in the INDEXES/ETFs. Many ETFs are built from other ETFs and are rebalanced automatically depending on Market cap and price momentum. There is a big risk of a cascading effect if the Mega Caps sell off significantly. The good news is that this effect can work in both directions.
WEEKLY EVENTS
Monday Fed’s William Speaks & NY Fed Manufacturing
Tuesday US Retail Sales, Industrial Production & Fed’s Bullard Speaks
Wednesday US Housing Starts, Canadian PMI & US EIA Crude Inventories
Thursday ECB Minutes & US Jobless Claims
Friday Baker Hughs Rig Count
NOTABLE EARNINGS
Monday NIO, TTWO, SSYS
Tuesday HD, HUYA, JD, SE, WMT, WB, DOCS
Wednesday LOW, TGT, TJX, CSCO, BEKE
Thursday BJ, GOOS, KSS, LSPD, VIPS, AMAT, DECK, PANW
Friday DE, FL
BULLISH NOTES
Potential bullish momentum
Oversold conditions
Potential de-escalation in Ukraine
Further pull back in bond yields
USD Weakens
Mega Caps hold support
BEARISH NOTES
Hawkish talk from Fed Heads
Escalation of the war in Ukraine
Continuation of inflationary pressures
Bond yields continue higher
USD continues to strengthen
Continued Weakness in Mega Caps
Comment:
Rejection midway between 9/21 emas. Not positive. Expect a push higher to the 21 ema. Support needs to hold at 3980 or the recent lows may be in play. Expecting choppy price action till the end of the week due to OPEX on Friday.
Comment:
The 3980 level did not hold and the Mar 12th low was broken. Price reversed exactly at the 1.618 fib extension. The same reversal happed on the NAS last week so the 1.618 levels are being respected. The reversal closed the S&P right at the open leaving the double bottom intact. Hard to tell if it was short covering or OPEX price pin to 3900.
