Posted 03/12/12 6:30 PM ET by Jason Goepfert
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NOTE: I've promised my kids that during
their spring break holiday - this week - I'll be present as much as possible.
That means these reports will only have updated charts, and little to no
commentary. There shouldn't be much,
if any, interruption in the daily chart updates.
No change from late last week...given the Active Studies (see below) and other
developments we've looked at recently, we're looking for a choppy to down market
in the coming weeks.
Bottom Line
We've been looking for weeks for some sign of
weakness in the broader market, and finally the S&P 500 has broken several
months-long streaks, and closed below support at 1350 (though it did manage to
once again rebound right back above on Wednesday). We normally look
for at least two closes below support before getting too riled up about the
potential for the uptrend to take a sustained breather. Based on the
studies we've discussed since late January, we'd expect a 2-4 week pullback of
3% - 8% in magnitude.
Today's Studies & Updates
This section will not be updated during
the week of March 12th.
Several times since mid-January, we've seen the
number of bearish (for the market) indicators jump close to or above 30% of our
total indicators. That's a decent sign of increased risk for a market
decline, though in the past that figure has soared above 40% or even higher.
Now that we've finally seen something of a break from the relentless uptrend
that started 2012, the Indicators At Extremes is back to giving more normal
readings.
For much of the time from mid-January through
mid-February, many of the sectors were in overbought territory. Several of
them started to slip, reflecting the poor breadth that accompanied the latest
push to new highs in the broader equity indexes. Now that "the market" has
taken a breather, we're seeing some of those sectors already starting to head
towards oversold.
See
this
Data Brief for more background on the Sentiment Scores
With the correction from extremes in many
currencies over the past couple of weeks, sentiment towards the US Dollar has
become less enthusiastic, which is normal. Traders have moved more into
the Aussie Dollar. We're also seeing some extremes in the energy
contracts, particularly Unleaded Gas and Heating Oil.
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