It was a bearish month for equities, SPX -106pts (2.6%) to 3970, with the Nasdaq comp’ -129pts (1.1%) to 11455. WTIC -$1.82 (2.3%) to $77.05. Copper cooled by -14cents (3.2%) to $4.09. The USD strengthened by +291bps to DXY 104.82. The US 10yr yield climbed by +40bps to 3.92%.
SPX, monthly
February saw a new cycle high of 4195, but cooling to 3943, and settling at 3970. A bullish monthly settlement above the 10MA, but the monthly candle is rather spiky on the upper side, indicative of bullish exhaustion. Momentum remains very negative, and is still a restraint on all rallies.
Nasdaq comp’, monthly
February saw a new cycle high of 12269, but cooling back to 11455. Whilst we saw a monthly settlement above the 10MA, bears can argue structure is a multi-month bear flag. Alarm bells with any price action <10k, although that is a rather considerable 13% lower.
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WTIC, monthly
Oil fell for a fourth consecutive month. However, I’d note that the most recent four monthly candles are all spiky on the lower side, indicative of bearish exhaustion. For confidence, the bulls need >$90. That won’t be easy if the main market is lower in March, or if the dollar is strengthening.
The wild card… something geo-political in nature. I would not be surprised to wake up one morning, to see a hyper spike >$100. I see oil and the related energy stocks as the very last thing to be short.
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Copper, monthly
Copper cooled back, if managing a second consecutive monthly settlement above psy’ $4.00. Momentum ticked upward, if remaining marginally negative.
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USD, monthly
The dollar printed a new cycle low of DXY 100.68, but saw a rather powerful upside reversal, to settle at 104.82. The February candle is arguably bullish engulfing, and bodes bullish into the spring. Momentum… which was falling, is trying to level out around the key zero threshold. So long as psy’100 holds, I will be seeking a grander target of the 120s.
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US 10yr yield, monthly
The US 10yr yield settled the month at 3.92%. The February candle is arguably bearish engulfing, and bodes for further upside in March. Multi-month structure is a bull flag. Key thresholds, psy’ 4.00%, 4.25%, psy’ 5.00%, and then its empty air to 7%, a level not seen since 1996 !
*next CPI print is March 14th, with rate hike nine March 22nd
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Looking ahead
Wednesday will see ISM manu’, construction, EIA Pet’, vehicle sales
Earnings: LOW, DLTR, KSS, ANF, JACK, PBR, NIO, WEN, CRM, SNOW, PLUG, SPLK, OKTA, CELH, VEEV
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Final note…
One sixth of the year has passed by. In that time, I’ve done three whole trades, all index-shorts (via SPY PUTS), +50%, +25%, and +30%.
I can’t complain, but I remain hyper cautious, not least as February saw indexes break new multi-month highs. For confidence of the 3200s, I need to see a few daily closes under the daily 200MA (3940).
I’m hoping for a push to the 4050s before this weekend, and then re-short.
More than the market though, I need to make a start on finding a place to move to. I guess that might take the bulk of the spring/summer to arrange.
One way or another, I can’t be living here beyond end Q3. I have to get out of here, or I see no realistic future for myself.
Goodnight from London