Alright, Lets Dive Into The Weeds.
Markets continue to drift higher. Percent of Nasdaq stocks that are above the 50-day moving average is finally back above 50%. Furthermore, the percent of stocks above the 200 day moving average is back above 40%.
This is a rather large improvement to the the 20% reading that we had earlier in March. I know it is easy to be worried, but this is a big piece of the puzzle that we haven't seen since we were back near all time highs.
Last week, I noted the TD Sequential 13 bottom on VTI and we discussed about the idea of staying long. I don't think my bias has fundamentally changed but we are back into the TDST level which could create some chop in the medium term.
QQQ back into the TDST level after bottoming on the TD Sequential 13.
240M TD 9 Setup, 30 Minute TD Sequential 13 (QQQ)
RSI divergence in ARKK starting to form and holding a breakout that has occurred after holding a long term trend bottom.
XBI also has the same exact look, holding long-term trend but below key levels still. I don't think XBI is safe until it is back near the 95 level.
I'm also expecting small-caps to underperform going forward. The ratio is in a long-term downtrend and is now retesting key resistance. Well below TDST and flipped lower after the TD Combo 13 on the ratio (IWM/SPY)
What is actionable off that? AMC short against the 16 area on a closing basis.
I think you have to keep it very simple here on a tactical basis: are above 4400 or not? Everyone believes we are in a bear market and looking for reasons to be short:
Yield curve inversion
Gamma vanna lambda levels.
The longer you stay above 4400 in the June ES contract, the more likely you are going to leave bears in the wind like literally every other single rally we have had in markets. Is it different this time? Sure. Risk not being discounted properly? Sure. However, you could have done yourself a big favor and started fading every single NATO/WW3 headline 2 weeks ago. Suddenly one should move the goal posts back and start make yield curve inversion the ultimate truth of bear propaganda? I think it is way too early to tell.
For one, we are not anywhere close to a recession yet. In fact, wages should really start to perk up here. I really think gasoline prices are about to top off, along with the rest of the energy complex. If you see a 5 handle on the national average, I think you can pretty much forget everything I said here.
TLT completed the DeMARK 13 sequential countdown. Another piece of the puzzle. I'm a little bit early on my call for bond allocation from last week. Giving it a little bit more room this week as EDZ23 is starting to get a little bit cheap from my view -- especially if energy starts to pull in.
IBKR has a spicy risk-reward short setup against today's high. Lines up with bonds starting to bounce.
VALE DeMARK 13 Sequential Sell. Confirmation if it goes below 19.
USO Sequential 13
Exxon Sequential 13
Crude Oil Covered Call ETF
Anyway, long story short: the risk-reward is starting to take form for rates to pullback from energy coming off. What this means for equities is still TBD. I'm keep it simple: are we above 4400 on ES? Yes? Stay long.