Weekend Report for Monday, February 03, 2025
Bottom Line:
From last week:
The week gave us a new all-time high in the SPX, but as of now it stands along. All other US indices are lagging, for now. IF we are still in a bull market this will (must) change and we will see most, if not all, of the US indices also follow through to new highs.
The short-term picture clouds the intermediate term picture at the moment because the short-term price action is extended, particularly in the SPX, and there are concerning divergences.
A retracement prior to much further rally is probable.
We got the retracement with a somewhat dramatic drop last Monday, then the indices rallied strongly into Friday afternoon and reversed on news, closing at the mid-point of trade for the week.
In the bigger picture the indices have gone net nowhere since November. The SPX tested a triple top on Friday before trading sharply lower in the afternoon.
The indices will restore an immediately bullish case IF they all close above Friday’s day session highs. It will be bearish if they all close below last week’s lows.
VIDEO:
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SPX
Upper KRA: 6128
Lower KRA: 5961
There is no way to know before at least the Sunday evening Globex open if Friday afternoon’s drop was simply “noise” or if it is signaling the beginning of something much larger to the downside. Monday’s low and Friday’s high are the keys. A close above Friday’s high should be at least short-term bullish; a close below Monday’s low is at least short-term bearish.
SPX Profile
The SPX is in an increasingly mature 3-mth. Auction. It traded to its upper extreme on Friday and then sharply reversed. It is unlikely to hang around current levels for long. I am expecting a sharp multi-day move to begin soon.
NDX
Upper KRA: 21949; 22141
Lower KRA: 21707-21561
Same comments apply to NDX as SPX.
DOW
Upper KRA: 45081
Lower KRAs: 44035
Same comments as for NDX.
RUT
Upper KRA: 2322
Lower KRA: 2254-2221
New York Composite
Upper KRA: 20332
Lower KRAs: 19819
Similar position as SPX
Dow Jones Transports
This is another heavily watched index that is a long way from confirming the bull market.
Internals – VIX
VIX isn’t extreme either way.
Internals – NYSE Data
Both 5-day and 10-day MAs of NYSE advancing issues have rolled over from upper extremes. Breadth will need to expand positively if the bullish case is to play out.
Cumulative NYSE Adv/Decl
From last week and no change:
The cumulative NYSE adv/decl line is diverging against the higher highs in the SPX (SPY is shown), more evidence suggesting caution.
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US Dollar
Between critical intermediate-term levels.
US 10-yr Notes
In general I would continue to favor shorts.
Gold
The trend is up.
Crude
Crude continues to sell off. I would favor shorts, but a bounce could occur at any time.
Bitcoin
