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Strategies & Market Trends : General market lab and commentary

SPY 679.68

+0.7%

Nov 26 4:00 PM EST

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From: Robohogs	2/27/2016 8:14:12 PM
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Well, crazy week last week. We recaptured 1950 and got to the Fib 50% retrace from high to recent low. We also broke above the W on the pattern of recent weeks. We gave back 1950 on Friday, and oscillators are very overbought in here - NYMO, stochastics, etc. We also are at the neckline on a slanted reverse H&S. Sentiment indicators also no longer stronger favor us with bulls back up and bears down toward levels late last year. Friday was a strange day. Risk off indicators all were severely hit even as SPX and Nazz went down, although IWM was up and breadth was ok for down day. FANG also got hit. Risk off sectors getting hit were: Utes smashed, bonds off 1%, yen off, vix down and gold down. Vix is near very ST extended levels BUT can get down toward 15. Vixcentral shows no near-term fear. Transports were strong. All of this indicates to me, the inverse H&S should not fire but instead we should tread water in here or slowly advance at best. We could go down hard, although with buyback indicator on for 4-6 more weeks, my best guess is we see rotation out of FANG into new leadership and broad mkt stays flattish to down 2-3% while many stocks go up. All while over-bought becomes neutral over 1-2 weeks. Then we try to get to 2000. It is not out of the realm of possibilty however that we launch upward. Extreme oversold mkts can stay overbought on rebounds. I went back to rally from last Oct//Nov and rally hesitated for a few days only as overbought and just got more overbought. We also have room to collapse as fear based support gone - this is how bears make new lows. This is TA in a nutshell - no hard answers. Only possibilities. I personally find it hard to believe the extreme breadth that easily overcome. At least ST, we may have buy the dippers back too. But this rally has done nothing to say bull or bear yet. It has taken out one Armageddon caller who said Transports would retrace to a neckline break and then collapse taking all stocks. Well neckline in rearview here. One strategy might be to sell inflated calls in FANG 2-5% above. NFLX ugly Friday candle - way way up then down. AMZN just weak as it has been except one rally day. GOOGL OK but still down. The one risk is if we just blast through 1950 on way to 200 day. Odds against it but.... Jon

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