For Sunday, February 25, 2018                                Go to Website
	Current Strategy Positions Fibtimer currently has 13 successful strategies   S&P 500 Position -        BEARISH   Nasdaq 100 Position -  BULLISH   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:

"Has everyone forgotten last week? Selling that fast and steep does not just end with a rally to new highs. Try and remember the two days that declined some 4% each. Those are huge single day losses. They damage the technical underpinnings of the stock market."

This week:

Volatility still rules the day. Big swings in price are the norm, at least for now.

On Wednesday the Dow was up 303 points, yet the big gain disappeared near the end of the trading day, with the Dow losing 167 points at the close. That is a 470 point swing or about 1.9%.

It was also a bearish reversal day in the S&P 500 Index (SPX). Bearish reversal days occur when the index surges to higher highs than the previous trading day and then ends at lower lows than the previous trading day.

They are bearish indicators typically followed by several weeks of lower lows. So far that has not been the case.

On Friday the major indexes rose in a broad advance. But while the Nasdaq 100 Index (NDX) has broken above resistance, the SPX and the Russell 2000 Small Cap Index (RUT) both remain just below resistance.

That puts the NDX at a bullish level and will force an entry (see below). It also leaves the SPX and RUT still below the resistance level. These levels are capable of stopping an advance. So they are important for any bullish entries.

In the below chart of the SPX you can see how the Fib 61.8% level is acting as resistance. It was almost reached last week and then the SPX sold off all week with the exception of Friday. Still, Friday's advance did not break through the resistance level.

Below is the daily chart of the Russell 2000 Small Cap Index (RUT). We typically look at this chart because it is moved mostly by individual traders. The big institutional traders use stocks in the NYSE and SPX.

Support is at about the 200-day moving average line. Resistance is at about RUT 1555 which is the Fib 61.8% resistance level

Small caps also were unable to break through the 61.8% resistance level. This level is also right at the 50-day moving average line. Strong resistance.

There are other major indexes having the same problem. For example overseas markets as represented by the International markets iShares MSCI Index Fund (EFA) are having difficulty pushing through resistance at the Fib 61.8% level.

There are several major indexes unable, so far, to break through critical resistance.

Then there is the NDX which pushed through with no difficulty. That position (below) is being forced by our strategy to enter a bullish position.

Interestingly, Federal Reserve policymakers see an economy that may be past full employment. That statement was a surprise. Past full employment!

These conditions will continue to call for more rate increases in 2018.

Fed watchers widely expect the FOMC to approve a quarter-point rate hike in March and likely two more through the rest of 2018. Now there is talk of a fourth hike.

Last week we wrote: "Of course if it is (different this time) we will have to adjust and start reentering. But we are, at this point, looking for a pull back and eventually a test of the lows."

Apparently it is different for the NDX and, so far, not for the other major indexes.

Regularly Followed Weekly Charts

NYSE Advance-Decline Line

The NYSE Advance-Decline line climbed higher this week as Friday's advance added to the gain. So far the A-D line has made up about half of the losses.

We have support at about the 48000 level on the below chart.

Suprisinglyy, the A-D line is back above its 50-day line.

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

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

This is a perfect V bottom. But perfect V bottoms are somewhat unusual.

Just as the NDX is outperforming other indexes, so is the A-D line for the NDX.

CBOE Volatility Index (VIX).

The CBOE Volatility Index (VIX) closed at 29.06% two weeks ago, improved to 19.46% last Friday and is now at 16.49%.

If you look at previous times that VIX rose above 50.0 you will see that during the weeks after there were many VIX highs near 30-40. Only slowly did VIX recover.

So far VIX has the one spike above 50.0 and since then it is mostly back to normal.

It is either "different this time" or we have not seen the last of higher VIX readings ahead.

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

The number of NYSE stocks trading back above their 200-day average line stayed about the same, closing Friday at 58.41%.

But this chart is still down around its lower support level. The coming weeks may see a great deal of volatility in this chart.

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 85.4% with at least some bullish market positions.

• Investor's Intelligence Bull vs. Bears as of Feb 20, show 48.5% bullish vs. 14.6% bearish. Bull vs. Bears last week were 51.9% bullish vs. 14.4% bearish.

• Barron's Magazine Consensus Index shows 66% bullish vs. 68% bullish the previous week.
  

• Market Vane's Bullish Consensus shows 64% are bullish vs. 62% 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:

As interest rates continued to rise, purchase applications for home mortgages fell 6.0 percent on a seasonally adjusted basis in the February 16 week, putting the unadjusted year-on-year gain in the Purchase Index at 3.0 percent, down 1 percentage point from the prior week. Applications for refinancing, which are even more sensitive to mortgage rates, fell 7.0 percent from the prior week.

A surge in services and continued strength in manufacturing pushed the PMI composite to a 27-month high at 55.9 in the February flash, surprising analysts and surpassing the Econoday consensus range by a wide margin.

An uptick in supply and lower prices failed to boost existing home sales in January, which unexpectedly fell 3.2 percent versus the marginally downward revised December to an annualized rate of 5.380 million, well below the consensus estimate of 5.650 million. Year-on-year, home resales were down 4.8 percent.

Initial jobless claims continue to post very favorable readings that remain near historical lows, at 222,000 in the February 17 week down 7,000 from the previous week's downward revised level, taking the 4-week average to 226,000, just shy of the 45-year low seen two weeks ago.

The index of leading economic indicators points to robust economic growth ahead, accelerating in January to rise 1.0 percent following a 0.6 percent gain in December. Contributing most to the unexpectedly large gain in January were building permits, stock prices and once again ISM's new orders index, where unusually strength has not yet been translated to similar gains in government data.

Manufacturing activity in the Kansas City Fed's district posted very solid growth in February, with the composite score beating expectations by rising 1 point to 17. The production component of the index rose 5 points to 21, as factory activity increased particularly for the production of metals, machinery, and plastics.

Conclusion:

The SPX posted a substantial advance on Friday, but for the full week had only a + 0.55% gain.

There remains strong resistance at about SPX 2760. This is the Fib 61.8% retracement resistance level. A "decisive" close above this level would likely end the correction. But as long as this resistance holds, we need to be careful of any bullish entry.

We remain in cash.

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

Maybe it really is different this time.

The Fib 61.8% resistance level is where rebounds typically reverse. For the NDX, the breakthrough was substantial.

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:

The NDX spent the week right at its 61.8% Fibonacci resistance level. But on Friday that resistance was decisively broken. This forces a bullish position for the NDX.

The NDX portion of this strategy is BULLISH. Aggressive traders following this strategy should enter the below fund before the close on Monday, February 26th.

Nasdaq 100 Index (NDX), Weekly Chart