For Sunday, May 13, 2018                                Go to Website
	Current Strategy Positions Fibtimer currently has 13 successful strategies   S&P 500 Position -       BULLISH   Nasdaq 100 Position -  BULLISH   SmallCaps Position -    BULLISH   U.S. Dollar Position -    BULLISH   Bond Fund Position -    BEARISH   Gold Fund Position  -    BULLISH 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:

"After successfully testing its 200-day moving average line on Thursday, the S&P 500 Index (SPX) opened at that line on Friday and then posted a reversal rally that will likely trigger a buy signal in coming days. The reversal did trigger a buy in the Nasdaq 100 Index (NDX) portion of this strategy which will result in a 50% invested position for the strategy at the close on Monday."

This week:

Last week we had a breakout for the Nasdaq 100 Index (NDX). This week the S&P 500 Index (SPX) also broke out as well as most of the major indexes.

There are several very bullish indicators pointing to this rally being the one that finally puts the correction to rest.

First, the below chart shows a pennant pattern. Breakouts or breakdowns from pennant patterns typically point to the direction the stock market will now take.

On Wednesday the SPX closed above its long-term declining trend resistance line (top line of the pennant.) This was followed by an upside gap opening the following day.

Second, pennant patterns tend to have a five wave pattern. Last week's lows were the wave five of a clearly marked Elliott Wave pattern. Wave five was followed by the breakout.

Third, this was the third test of the 200-day moving average line as well as the rising trend support line (lower line of the pennant.) This correction has lasted much longer than typical. The market was due a reversal and rally that potentially will again reach the prior highs.

The third test of major support, if successful, tends to be the final one.

Another huge positive is the NYSE Advance-Decline Line which broke out to a new bull market high.

This means it was not just a few powerful companies pulling the market up, but most of the companies in the NYSE which has 1600 stocks.

Lastly small caps almost closed at a new bull market high. Small caps have been strong for weeks now and this week they tested their 50-day line which held.

Not the 200-day line like the other indexes, but the 50-day. The test of the 50-day also completed a five-wave pattern.

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Small caps broke above their declining trend resistance line and closed just a fraction from new highs.

One last item. MACD managed to close in bullish territory.

Regularly Followed Weekly Charts

NYSE Advance-Decline Line

Market breadth has broken out to a new high. Not just a fractional new high but a solid breakout.

Interestingly the A-D line also formed a five-wave pattern and each down wave ended with a higher low. Each up wave has had a higher high.

The Nasdaq 100 Index Advance-Decline Line closed this week well above its 50-day average.

The NDX A-D line appears to be following its 50-day average with weekly closes both above and below it.

CBOE Volatility Index (VIX).

The CBOE Volatility Index (VIX) had a substantial decline this week, closing at 12.65.

This tells us that investors are turning bullish. They do not feel the need to cover their positions with insurance in the form of options.

Market Internals

The NYSE percent of stocks that are trading above their 200-day averages jumped this week and has now erased half of its correction losses.

By the close on Friday 58.66% of stocks were trading above that line as compared to 53.22% the prior week.

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 79.4% with at least some bullish market positions.

• Investor's Intelligence Bull vs. Bears as of May 8, 43.1% bullish vs. 20.6% bearish.
  Bull vs. Bears last week were 43.6% bullish vs. 20.8% bearish.

• Barron's Magazine Consensus Index shows 54% bullish vs. 57% bullish the previous week.
  

• Market Vane's Bullish Consensus shows 57% are bullish vs. 57% 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:

A stronger increase in consumer credit is the call for March, at a consensus $15.6 billion vs $10.6 billion in February. Growth in revolving credit has slowed sharply this year and is one of the factors that has held down consumer spending.

The highest earnings improvement levels in 45 years helped support small business optimism in April after a sharp decline in the previous month, according to the National Federation of Independent Business (NFIB), whose monthly Small Business Optimism Index ticked up by 0.1 point in April to 104.8, roughly in line with the consensus forecast.

The number of job openings in the U.S. surged in March to a record 6.55 million from 6.1 million, showing companies are still eager to add workers with the economy growing soundly almost nine years after the last recession.

There are more than enough job openings, at 6.550 million in March, to give everyone who's looking for a job, at 6.346 million in April's employment report, a job. And though 5.425 million were hired in March, the gap between openings and hires in today's JOLTS report, at 1.125 million, is the largest on record which suggests that employers are having a hard time finding people with the right skills.

Purchase applications for home mortgages fell a seasonally adjusted 0.2 percent in the May 4 week, shrinking the unadjusted year-on-year gain to 3 percent. Applications for refinancing fell 1 percent from the previous week to their lowest level since October 2008, with the refinance share of mortgage activity decreasing by 0.2 percentage points to 36.3 percent, the smallest share since September 2008.

Usually there's not much difference between the advance inventory estimate and the month's final, but there is in March. Wholesale inventories rose only 0.3 percent vs the advance gain of 0.5 percent. The build however is in line with sales which also rose 0.3 percent in the month to keep the stock-to-sales ratio unchanged at 1.26.

Prices are up for steel and aluminum but overall wholesale prices proved subdued in April. The headline increase of only 0.1 percent is 2 tenths below Econoday's consensus and 1 tenth below the low estimate. When excluding food, where prices fell 1.1 percent, and also energy, which inched only 0.1 percent higher, producer prices did manage an as-expected 0.2 percent increase. When excluding food and energy and also a 0.2 percent gain for trade services, the result is only plus 0.1 percent which, like the headline, is below the low estimate.

The number of people who applied for U.S. unemployment benefits in early May stood at 211,000 for the second straight week, keeping initial jobless claims near a 49-year low. New claims were flat at 211,000 in the seven days ended May 5, the government said Thursday.

The consumer price index rose 0.2% in April, the government said Thursday. A more closely followed measure that strips out food and energy, known as the core CPI, rose a smaller 0.1% last month.

The consumer sentiment index held steady at a solid 98.8 for preliminary May led by a modest gain in the expectations component, now at 89.5, which offset a slight dip in the assessment of current conditions, at 113.3. Year-ahead inflation expectations edged 1 tenth higher to 2.8 percent, a level last matched back in March this year but not surpassed since March 2015.

Conclusion:

On Friday of last week the stock market reversed higher from its 200-day moving average line and this week that reversal was confirmed with a strong rally that broke through several important resistance levels.

Last week's reversal also confirmed this to be a five-wave decline which is what was expected in a pennant pattern.

The SPX portion of this strategy is BULLISH. Aggressive traders should be in the Rydex Nova S&P 500 Fund - RYNVX (or other bullish S&P 500 index fund or ETF such as SPY or RSP).

S&P 500 Index (SPX) Daily Chart

S&P 500 Index (SPX), Weekly Chart

MACD on the daily chart remained bullish during the week and closed at 60.21.

On the weekly chart MACD remains in bullish territory and though it is still in a bearish crossover, weekly MACD has reversed higher..

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 5995, 50% at NDX 5593 and 61.8% at NDX 5200.

Conclusion:

Last week's Friday rally triggered a buy signal for the NDX and the tech index posted a solid +2.71% gain this week.

The NDX portion of this strategy is BULLISH. Aggressive traders should be in the Rydex NDX 100 Fund - RYOCX (or other bullish NDX 100 index fund or ETF such as QQQ).

Nasdaq 100 Index (NDX), Weekly Chart