February Ends with Fourth Monthly Gain; Tech Stocks Rally to Record Highs
Major Indices Week of March 1, 2024
FAANG Weekly
Stocks ended the month of February scoring the fourth monthly gain in a row and then rallied on Friday with tech leading the way to new record highs for the FANG, the Nasdaq and the S&P500. Secondary stocks led the week with sharp gains as the Russell moved to the highest weekly close since 28 March 2022, as the RSP:SPY is still trying to show a potential double bottom. It was another week with mixed news and the anticipated PCE came in hot. That said, prices sloughed off the news with a rally Friday that left the hourlies in overbought territory. The weeklies remain overbought, the monthlies are confirming the new highs on the stochastics and sentiment remains mixed and frothy. Bitcoin soared toward the record highs set back in 2022.
Is This A Bubble?
Mixed, because even as stocks move to new highs, and funds continue to move in, there remains constant talk of this being a “bubble.” Ray Dalio threw some cold water on that idea on Thursday as he outlined the status of his “bubble gauge.” Euro Stoxx moved into a 23-year high this past week. Again, we are only in the very beginning baby steps of the Technological Revolution. The next decade will make the early 19th century Industrial Revolution look like kindergarten. The AAII Asset Allocation Survey showed cash reserves at 16.81% at the end of February.
Dow Jones Momentum
These extreme fluctuations in market psychology still hold the potential of favoring a sharp melt-up in prices as they move into a bona fide third-wave. While there was some heightened volume last week with the month end settlements, market breadth is not crazy and, as Dalio pointed out above, there is no sign of massive volume ‘blowoff’ or manic type activity. The Dow momentum looks more like mid-trend than any type of extreme.
Cycle Notes
Now that we are in March, we wanted to point out that the long-term cycle timing is headed into one of the most critical periods in at least a couple of years. Between now and the end of April there is some extremely strong timing coming due for the markets.
52-Week A/D Line
Sentiment indicators remain in greed/extreme greed readings with breadth greedy but still in a paltry trend. Last week in the AAII Sentiment Survey: Pessimism Decreases. The Dow A/D line moved down marginally to 5743, at record highs. The VIX closed lower, on the bottom of the week’s range. The Put/Call ratio dropped to 0.70, reflecting extreme greed. The 52-week, A/D moved up to +5.02% and indicates extreme greed. The Dow closed the week lower, down -0.11%. The S&P set record highs, up +0.95%. The Nasdaq ended the week up +1.74% at a record high, the FANG moved into record highs, up +0.79% and the Russell rallied sharply, up +2.96%. The 10-year notes rallied and closed on the high for the week.
Futures Prices Year-to-Date
The CRB is now up +6.01% on the year.
The CRB rallied sharply, closing up +2.43...as crude oil staged an outside week up with prices hitting the highest levels since early November 2023 and spot trading briefly above $80. Gold rallied to an all-time record high close on the weekly chart as the APR24 contract takes over on the spot charts. The XAU is dragging far behind the futures market. The CoT is still not showing any radical moves, Asset Managers are buying, Speculators are flat but open interest in S&P shorts is high.
Timing Points ?
Monday marks minor timing, and there is a focus on bonds and interest rates. Next strong timing date is the 19th. The period between March 19th and April 30th represents some of the strongest long-term timing in more than a few years.
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CNN Fear & Greed Index
AAII Investor Sentiment Survey
Dow Jones Industrial Average Hourly HLC
The Dow closed higher Friday on the top of the day’s range but closed lower on the week and under the record high close set on 23 February at 39131.5. The hourly is reaching into overbought conditions, The daily stochastics need higher prices to avoid a divergence (see the momentum chart above.) The monthly chart looks robust and supports the higher prices. The Dow is holding right around a long-standing target at 39075. Resistance is 39196 and pivotal at 39210/39212. A drive back above 39212 should test 39235 with potential to the intraday highs at 39282/39283. Closes over 39283 can test 39651 and will renew momentum toward weekly objectives at 40245.4. Obviously, 40000 is a critical psychological area. Closes over 40245.4 will offer longer-term potential to targets in the 45244 area. Above 45244 gives monthly counts to 47400.
Dow Jones Industrial Average Weekly HLC
Support is at remains pivotal at 38988. A further breakdown under 38988 can retest of 38807, 38760 with full counts to pivotal short-term support of 38661/38658. Closes under 38658 setup a move toward 38547/38445. A breakdown under 38445 opens counts to 38202 and 38039 with potential to critical short-term support of 37947/37940. Closes under 37940 can carry to 37122 with counts toward critical short-term support of 36775. Closes below 36775 open counts to 35224.
Resistance
Support
S&P 500 Cash Index
S&P 500 Index Hourly HLC
The S&P rallied Friday to record highs as the hourly lurches into overbought territory. Prices drove toward the next upside target on the weekly at 5144 and closed just under that point. Resistance is pivotal now at 5140/5144. Rallies with closes over 5144 set up a drive to 5288 with counts toward 5432. A breakout over 5432 will open potential to the 5720 area. Closes over 5720 offer upside targets at 6000/6008.
S&P 500 Index Weekly HLC
Support is at 5120 and 5108. A breakdown under 5108 sets up a move to 5098 with potential to 5076/5074. A breakdown under 5074 sets up a move to 5056, 5038 (gap), 5030 with counts to pivotal near-term support of 5004/5000. Closes under 5000 suggest 4975 and possibly 4920 while opening potential to critical support of 4751/4750. A breakdown under 4750 should test 4714 with counts toward 4510. Daily closes under 4510 count toward 4447 with counts to 4315. Closes under 4315 have potential to critical short-term support of 4121/4115 through 4103.
Resistance
Support
?Charts courtesy of CQG, Inc., CNN, ?Koyfin, ?Trading View and AAII
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1 年Stocks ended the month with a fourth consecutive monthly gain and rallied on Friday, with technology stocks leading the way to new record highs for the FANG (Facebook, Amazon, Netflix, Google) stocks, the Nasdaq, and the S&P 500. Secondary stocks also saw sharp gains, as the Russell index achieved its highest weekly close since March 28, 2022. The RSP:SPY (ratio of equal-weighted S&P 500 ETF to the S&P 500 ETF) is showing potential for a double bottom. Despite mixed news and the hotter-than-expected Personal Consumption Expenditures (PCE) report, prices shrugged off the news and rallied on Friday, pushing hourly indicators into overbought territory. Weekly indicators remain overbought, and monthly indicators confirm the new highs on the stochastics. Sentiment in the market remains mixed and frothy. Additionally, Bitcoin is making a significant surge towards its previous record highs set in 2022.