S&P 500 Goes Higher – Still in Key Inflection Area

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The S&P 500 eked out a small gain for the week. It finished up .39% after some relatively light selling. It just seems the S&P 500 didn’t want to finish off February with a ‘bad’ week. Nine out of the past ten weeks have ended positively. Even though the week was up, we are still in the area of resistance which means it is a key inflection point in the S&P 500.

The month of February rotated the longer-term momentum positive for the S&P 500 and remained negative for the MSCI All World (ex-USA) index. The S&P 500 of course can continue higher, but suspect we will see at least a shallow pull back in the coming weeks considering we are within an area of resistance, some of the US sectors have started to flash sell signals, and market breadth has not been advancing with the index over the last few weeks.

As far as positions and plans for this week. The US Dollar was up and still looks good. Emerging markets were down for the week and created a sell signal, but they are still within a tight trading range so the context still looks good. The technology position is one of the market leaders, but failed at highs this past week. We received a sell signal and will adjust the stop up in order to preserve capital. All other positions are a good way away from stop levels.

This should be an interesting week as we are once again opening the week at resistance. The markets have been running in a tight channel to the upside, which is unsustainable, but doesn’t mean a reversal in trend, only that at least a rest from upside price action is closer rather than farther away. We are continuing to be patient and wait for a pull back to add more risk in order to give better risk reward ratios. Have a great week!

Warm regards,

Adam Straseske, CMT

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