For Sunday, February 11, 2018                                Go to Website
	Current Strategy Positions Fibtimer currently has 13 successful strategies   S&P 500 Position -        BEARISH   Nasdaq 100 Position -  BEARISH   SmallCaps Position -    BEARISH   U.S. Dollar Position -    BEARISH   Bond Fund Position -    BEARISH   Gold Fund Position  -    BEARISH These positions were started over previous weeks. You need a paid subscription for real time signals. Sector Funds, ETF and Stock positions are not included above.

S&P 500 Index (SPX) Chart Analysis

Last week:

"The stock market has been rising at an unsustainable rate for most of 2017. In January of 2018 that rise only accelerated. Although there were reasons for the selling this week, once it started investors and traders were quick to abandon the bull market and exit. The S&P 500 Index (SPX) declined - 3.85% for the full week, still not reaching a five percent pullback which would be a minimal correction."

This week:

The intra-day lows reached on Monday during the worst of the selling, were broken on Thursday when stocks had another major selloff. That was the only obvious support level that had a chance of holding in the short-term, and it was decisively broken.

On Friday the markets opened in rally mode, but that break in support soon weighed in and prices dropped again, this time to new lows. Yet the volatility was so great that the losses were erased and the S&P managed to close with a + 1.49% gain.

That was not the case for the entire week during which the SPX lost - 5.16%.

At this time, as scary as these declines are, we are still looking at this as no more than a correction in a continuing bull market.

The economy is strong and getting stronger. Jobless numbers are at historical lows and wages are getting better. There is no reason for a bear market at this point.

That opinion could change of course, but for now, even while we are almost 100% in cash positions, we will be looking for a bottom and a reentry point.

But we do NOT see this as a "V" type correction. The technical damage is too severe so we expect rallies and then selling again. Possibly testing the lows and possibly to lower lows.

Friday's decline dropped the SPX right to its 200-day moving average line. That was apparently where many traders had buy triggers set up because the SPX immediately rallied.

In the daily chart of the SPX we show two support levels. The first was at Tuesday's low. It was broken on Thursday and Friday.

Note that this is also the 61.8% Fibonacci level (daily chart). Though SPX 2590 was broken to the downside, that break was fractional on Thursday and on Friday the SPX reversed and closed higher.

The second is at the 200-day moving average line. This is at SPX 2540. That level was reached Friday and the stock market immediately reversed and closed higher.

Could this be a bottom? Yes, it could. But there has been so much damage that we are looking for a retest of that low. If it holds again, we could see an end to the correction. If not, well then we head lower.

While it’s impossible to say for sure what was at work when the Dow Jones Industrial Average fell as much as 1,597 points on Monday, the worst part of the downdraft felt too many like machines run amok. For 15 minutes just after 3 p.m. in New York a deluge of sell orders came so fast that it seemed like nothing breathing could’ve been responsible.

When something like this happens there is not much that can be done. Basically just follow your strategies and try not to panic.

There were two better than 9 to 1 down vs up volume days in a row this week. Certainly not seen very often and it was the result of panic selling. Everyone headed for the exit at the same time.

Small caps, already the weakest of the major indexes we follow, triggered a go-to-cash signal on Monday (executed Tuesday).

There are two support levels for small caps. At RUT 1462 and then at RUT 1440. Both were hit this week but small caps rebounded, closing the week at RUT 1477.

This has the look of a reversal at a bottom. But it is far too soon to take any chance at reentry.

During extreme volatility on Monday, the CBOE Volatility Index (VIX) rose to just above 50.0.

We have been calling for this move for months, but certainly did not expect it to occur in a single week. The VIX is up + 114% in February. At its highs, VIX was up over +300%.

Note that VIX extremes in the past resulted in market bottoms. So the VIX chart could be very good news.

Regularly Followed Weekly Charts

NYSE Advance-Decline Line

The NYSE Advance-Decline line took a steep drop this week. The selling took the A-D line down to well below its rising trend support line.

The A-D line also closed below its 50-day moving average line and MACD has turned decisively lower.

We have two potential support levels on the below chart.

The first is at the November 2017 lows and the second at the 200-day moving average line.

Either could stop the freefall, or we could be at a bottom now after several of the major indexes hit their 200-day averages and then rebounded.

The Nasdaq 100 Index Advance-Decline Line decline hit its rising trend support line this week. That line is also at the same level as its 50-day moving average.

The A-D line is at very strong support levels. If they hold it would add weight to a bottom occurring at this point.

If we go lower, the next support is down at the December 2017 lows.

MACD has suffered a bearish crossover.

CBOE Volatility Index (VIX).

The CBOE Volatility Index (VIX) closed at 29.06% on Friday. This was a 68% gain for the week as traders began buying more insurance against further declines.

We covered this chart in the above report. The gains are so extreme, over 50.0 at the highs, it could be indicating a bottom is at hand or is very close.

We extended this chart to a twenty year time-frame to show what has occurred every time VIX reached the 10.0 level.

A VIX 10.0 is considered by many to be contrarian bearish, but VIX can stay contrarian bearish for a while once a strong rally is started.

Market Internals

As would be expected considering the selloff, the number of NYSE stocks above their 200-day moving averages declined precipitously

From 75% of stocks above their 200-day average two weeks ago to only 49% now.

Sentiment Indicators

These are contrarian indicators. Typically, when advisors are mostly bullish, the markets are near a top.

Note that these numbers are from a week ago. They reflect the preceding week's sentiment.

The number of bulls remains high. Remember that those who are neither bullish nor bearish have bullish positions and really should be considered bullish. Add bulls and those not specifically bearish and you get 84.5% with at least some bullish market positions.

• Investor's Intelligence Bull vs. Bears as of Jan 30, show 54.4% bullish vs. 15.5% bearish. Bull vs. Bears last week were 66.0% bullish vs. 12.6% bearish.
  
  ** as these numbers are a week old, we will be looking for a much higher percent of bears when next reported.

• Barron's Magazine Consensus Index shows 73% bullish vs. 77% bullish the previous week.
  

• Market Vane's Bullish Consensus shows 64% are bullish vs. 70% bullish the week before.

Fibonacci Support / Resistance Levels

We are now looking at "support levels" from the correction lows. Fib support levels on the weekly chart are as follows; the 38.2% retracement support at 2470, the 50% retracement support at 2346 and the critical 61.8% retracement support at 2222.

Market Moving Economic Reports Released this Week:

Growth in the services PMI held at a moderate 53.3 in the final reading for January, a 9-month low and unchanged from the mid-month flash and down 4 tenths from December.

The U.S. trade deficit in December and for the full year both rose to the highest levels since 2008, complicating efforts by President Trump to fulfill his vow to reduce the gap. The deficit in December rose 5.3% to $53.1 billion, the Commerce Department said Tuesday.

Consumer borrowing increased in December, up $18.4 billion vs an upwardly revised $31.0 billion in November which is the largest monthly increase since a break in the series 7 years ago. Revolving credit, a component that tracks credit-card debt, rose a sizable $5.1 billion following a November spike of $11.0 billion. On an annualized basis, revolving credit rose at a 6.0 percent pace in December.

Initial U.S. jobless claims fell by 9,000 to 221,000 in the seven days ended Feb 3. Economists surveyed by MarketWatch forecast a 235,000 reading. The more stable monthly average of claims declined by 10,000 to 224,500, the government said Thursday. That’s the lowest level since March 1973.

Moody's Threatens US Downgrade Due To Soaring Debt, Fiscal Deterioration. "The stable credit profile of the United States (Aaa stable) is likely to face downward pressure in the long-term, due to meaningful fiscal deterioration amid increasing levels of national debt and a widening federal budget deficit"

Conclusion:

The SPX traded in wild swings this week as computers took the major indexes for a ride. Extreme ups and downs in the range of 1000 Dow points were every day events.

This strategy went to cash on Tuesday, a rally day, but we could already have reached a correction bottom at SPX 2540 as discussed in the above report. We will find out next week.

The SPX portion of this strategy is BEARISH. Aggressive traders should be in CASH (money market funds).

S&P 500 Index (SPX) Daily Chart

S&P 500 Index (SPX), Weekly Chart

In the daily chart we have two support levels drawn. The first is at about NDX 6370. That support was broken intra-day on Friday but has apparently held after the NDX rebounded.

The second is at the 200-day moving average line, around NDX 6086.

Remember that a rally early next week could be followed by another major selloff. It is not safe to bet on the bullish side yet.

MACD on the daily chart has posted a bearish crossover. MACD closed this week at -32.52. A huge one-week decline.

MACD on the less volatile weekly chart of the NDX closed at + 227.76.

We have posted Fibonacci retracement "support" levels for the advance from the February 2016 lows. Those Fib support levels (weekly chart) are; 38.2% at NDX 5829, 50% at NDX 5455 and 61.8% at NDX 5081.

Conclusion:

As we wrote last week, the NDX had risen during the first four weeks of 2018 and had done so in a nearly parabolic fashion.

That resulted in the parabolic selloff we just endured.

For those who think such a selloff could be timed, remember that if there were clues to this selloff, it would just have occurred earlier.

Also, if knowing this was going to eventually happen kept us in cash over past months that would have just killed any chance of the gains we did realize.

The NDX portion of this strategy is BEARISH. Aggressive traders should be in CASH (money market funds).

Nasdaq 100 Index (NDX), Weekly Chart