Just a reminder that this week starts the more negative seasonal portion of March, and it's related to being a post-option expiration week. One caveat is that option expiration week (last week) tends to have a positive bias, and it obviously wasn't positive, so take this information for what it's worth, which isn't really too much when not surrounding a major holiday. But either we're running opposite to the historical seasonal tendencies, or this post options week could be potentially extra bad?
Chart provided courtesy of www.sentimentrader.com
The two-day FOMC meeting starts on Tuesday this week, with a policy statement announcement and a press conference by the Chair on Wednesday afternoon.
The S&P 500 / C-fund pulled back last week after that big jobs report rally the prior week. The action has created what looks like a mini bear flag. Mini bear flags are bearish, as the name would indicate, but the smaller they are, the smaller any breakdown would be from it if it does breakdown. Not that stocks can't go down hard, but technically it doesn't automatically mean a melt-down is coming. Perhaps we'll just get another test of the 50-day EMA, but then we'll see how the chart looks from there. If the rising support line breaks below the 50-day EMA (below 2725), then we could have trouble here.
The weekly S&P 500 chart remains in that longer-term rising channel and only that early 2018 breakout had the S&P above the channel for a few weeks. There's more room on the downside of the channel right now, but as we saw in January, the upper resistance is not impenetrable.
The small caps / S-fund is either forming a short-term higher high peak, or it is in a bull flag, in which case the downside wouldn't last too long. It's tough to say at this point and perhaps the reaction to the Fed meeting will determine it for us. Of course we'd like to be on the right side of that move so we'll see how the chart develops over the next two days for clues.
The Dow Transportation Index found support at the 50-day EMA (purple) last week but it remains below the 50-day simple average (orange). There's certainly no shortage of questions marks on these charts, but the best clue on this one may be that big red bear flag.
The EAFE Index / I-fund is struggling below its 50-day EMA and the recent weakness is a result of some strength in the dollar. That could be a small bull flag (blue) but the larger picture is the big red bear flag.
The Nasdaq may have given us a false breakout as the new highs have failed to hold and now there is a mini-bear flag sitting just below the old resistance line. Perhaps it just needs to fill that small open gap near 7440 before moving higher again. There's also decent support rising off the February lows.
The High Yield Corporate Bond Fund has been dancing between the 200-day EMA and the 50-day simple average for over 4-weeks now, and the range is narrowing.
The AGG (bonds / F-fund) has been in that bear flag for a long time - so long that I am wondering if it is a bear flag anymore. Perhaps the bond traders are just on hold until the Fed meeting and want to hear what they have in mind for interest rates for the rest of the year before committing to creating a bottom, or breaking down from the flag.