If it feels just like the market is yankin’ your chain, that’s as a result of it’s. A minimum of in a way of talking. For the umpteenth week in a row, shares reversed course on an intraweek foundation, defying any want that it will simply choose a route and maintain shifting in it. We’re nonetheless as on-the-fence as we’ve been since mid-January, with none clear bullish or bearish clues. Principally what the bulls are seeing is a scarcity of bearish conviction, and vice versa.
Nonetheless, the strains within the sand are clear.
We’ll element the place these strains are in a second. For now, let’s work our method by final week’s greatest financial bulletins and preview what’s coming this week.
Financial Knowledge Evaluation
The occasion began on Tuesday with a take a look at December’s residence value developments. As has been the case for a while now, the Case-Shiller index continues to indicate enchancment, though the extra geographically-diversified FHFA Home Worth Index does as nicely. Though fewer whole houses are transacting, those which might be proceed to see wholesome gross sales costs. A minimum of this side of the economic system is holding up.
Residence Worth Charts
Supply: Normal & Poor’s, FHFA, TradeStation
Rounding out the prior week’s third and last take a look at the College of Michigan’s sentiment index rating for February, final week we realized the Convention Board’s client confidence studying improved from January’s upward-revised determine of 89.0 to February’s studying of 91.2. Nonetheless, that’s not sufficient to shake both out of their present downtrends. (Word that the chart under doesn’t but present both sentiment information for February. They’re solely plotted by January.)
Client Sentiment Charts
Supply: Convention Board, College of Michigan, TradeStation
Lastly, on Friday we received January’s producer inflation figures. They proceed to dwindle, though stay above the Federal Reserve’s perfect goal. The route of the pattern may be as necessary as absolutely the stage although, so the FOMC should still really feel snug sufficient to go forward and decrease the Fed Funds charge a few instances this yr.
Client, Producer Inflation Fee Charts
Supply: Bureau of Labor Statistics, TradeStation
All the things else is on the grid.
Financial Knowledge Report Calendar
Supply: Briefing.com, TradeStation
This week’s information begins in earnest on Monday, with the Institute of Provide Administration’s manufacturing index report, to be adopted on Wednesday with an replace on the companies index. Economists are searching for a slight lull from each, however solely slight. Each ought to stay above their key 50 ranges, and maybe extra encouragingly, each are nonetheless in bigger-picture uptrends.
ISM Manufacturing, Providers Index Charts
Supply: Institute of Provide Administration, TradeStation
This week’s large information will after all be Friday’s jobs report. You might recall January’s information was surprisingly good, pulling the unemployment charge down from 4.4% to 4.3% and payroll development of 130,000 that in some way overcame a slew of layoffs. Forecasts suggests we received’t make fairly as a lot ahead progress this time round, however economists do nonetheless anticipate internet progress.
Payroll Progress, Unemployment Fee Charts
Supply: Institute of Provide Administration, TradeStation
Inventory Market Index Evaluation
Whiplash. Headfake. Indecision. No matter you wish to name it, the market’s awful with it proper now. And even when it’s not complicated, it’s actually annoying.
This indecision is crystal clear on the each day chart of the S&P 500 under. On Wednesday the index punched by the now-converged 20-day and 50-day shifting common strains that had till then been holding it again. Moderately than following by, nevertheless, it was peeling again by the following day, and fell again below these key strains within the sand on Friday. On the flipside, the 100-day shifting common line (grey) at 6,831.9 continues to carry up as technical assist. The S&P 500 solely wanted to the touch it as soon as on Friday to start out inching increased once more.
S&P 500 Every day Chart, with Quantity and VIX 
Supply: TradeNavigator
Zooming out to a weekly chart of the S&P 500 reminds us that — technically talking — the index has already damaged below a technical flooring (albeit solely barely). That’s the straight-line assist that extends all the best way again to Might. This isn’t precisely disastrous, however seeing it after the index has repeatedly examined and confirmed a straight-line ceiling round 6,996 does considerably bolster the argument that the ground is breaking down below the S&P 500’s more and more heavy weight.
S&P 500 Weekly Chart, with MACD and VIX
Supply: TradeNavigator
The NASDAQ Composite, however, isn’t behaving fairly as impressively. It’s discovering better-defined resistance, however doesn’t appear to be discovering any discernible assist. As its each day chart under exhibits us, not solely is the composite beneath most of its necessary shifting common strains (aside from the 200-day shifting common line at 22,000). Furthermore, these strains are beginning to fall beneath each other, with the 50-day shifting common line (purple) about two to a few days away from falling under the 100-day line (grey) at 23,190 that ended up being Wednesday’s technical ceiling. All of it suggests a large reverse of the bullish momentum that was in place by virtually all of final yr.
NASDAQ Composite Every day Chart, with Quantity and VXN
Supply: TradeNavigator
Regardless, the NASDAQ’s received some room between the 23,000 and its 200-day shifting common line (inexperienced) at 22,000 while not having to make a dedicated transfer in both route. The S&P 500’s received the some possibility, though it will be naïve to disregard the truth that its 100-day shifting common line has stepped up as a technical flooring. That doesn’t assure it should maintain. It’s simply price watching, as a result of it should take a transfer under that powerful assist to set off the following let decrease… if there’s going to be one.
All that being stated, we nonetheless contend the volatility indexes (VIX and VXN) will really be the very best indicators of a extra severe corrective transfer. Each seem like caught proper under straight-line technical ceilings which might be being repeatedly examined. Ought to that resistance fail to carry both volatility index down, this may increasingly really mark the proverbial opening of the floodgates which might be nonetheless technically closed.