The most overweighted global equities since …

Buyers have been active for much of the past week as the economic data was much stronger than expected. Retail sales, in particular, were surprising, posting 5.3% instead of the expected 1.2%. The Empire State Manufacturing Index stood at 12.1 (expectations were 5.9) and the Philadelphia Fed Manufacturing Index stood at 23.1 (vs. 19.2 expected ).

The closed-only hourly chart of the S&P 500 reveals that it was a pretty crazy race. The S&P 500 had a high of 3950.43 in the first hour of trading on Monday, but then closed the day a little lower at 3932.59. The trend reversed on Wednesday as the S&P 500 opened lower and then closed near higher highs. This was also Thursday’s trend, and the previous weekly low was violated before stocks rallied.

However, the surge in yields on Friday made lows buyers a bit more cautious, as the 10-year T-Note yield closed at the highest level since February 24, 2020. Since the start of the year, yields rose 0.91% to a close last week of 1.34%. The rapid rise in yields may create concerns among investors, despite similar levels in February 2020.

Most markets closed lower for the week, although the Dow Jones Transportation Average managed to gain 0.8% while the Dow Jones Industrials rose 0.1%. The big losers were tech stocks, like the Nasdaq 100
NDAQ
is down 1.6% and the SPDR Gold Trust is down 2.2%. Both suffered from rising yields.

For the week, the iShares Russell 1000 Value ETF (IWD)
IWD
was up 0.20% while the iShares Russell 1000 (IWF)
IWF
was down 1.7%. The higher rates gave financials another boost to the upside as the Financial Select Sector (XLF)
XLF
was up 2.8% for the week.

In January, I looked at data from the Bank of America’s Monthly Global Fund Managers Survey, which indicated that fund managers were taking on record risk and their cash levels were quite low.

In the latest survey, which was conducted from February 5 to 11, they are even more optimistic. The financial press went wild over BofA’s quote
BAC
Michael Hartnett that “[The] the only reason to be bearish is … there is no reason to be bearish. The allocation to stocks is the highest since February 2011.

The Spyder Trust Daily Chart (SPY)
TO SPY
shows that it bounced back in the first part of February 2011 and hit a high of $ 111.39 on February 18, 2011. At March 16 low (point c), the spy was down 6.9% in ten -seven days. According to data from the American Association of Individual Investors (AAII), the bullish% fell from 51.5% on February 3, 2011 to 28.5% on March 27.

On the chart, it is interesting to note that on the second and third days of decline in February, the SPY passed below its star band (point a). As is often the case with star stripes, the SPY then bounced back for several days (point b) before sales resumed. This rebound provided a good opportunity to sell buyers or establish short positions. At the start of May 2011, the SPY reached new heights.

Back to the present, the Invesco QQQ (QQQ) trust
QQQ
hit a new high of $ 338.19 on Tuesday but then fell to a low of $ 328.36 on Thursday as the 20-day exponential moving average (EMA) of $ 328.83 was reached. Daily support (line a) was briefly broken in late January and now stands at $ 325.55. The late January low was $ 312.76 which is now the support level to watch. There is also longer term support at $ 303.07 (row b).

The Nasdaq 100 Advance / Decline hit a new high on Friday, February 12. It has now retreated, but is still above its Weighted Moving Average (WMA). The A / D line has initial support at the late January lows, the most important being at its uptrend (c line). Daily On Balance Volume (OBV) did not hit a new high with the A / D line and fell below its WMA. This reflects that the volume increased lower over the weekend. There is next support at the October 2020 high (line d).

Crude Oil closed a little lower last week after hitting another high rebound. As I mentioned last week, this market is quite extensive on the upside. Gold, on the other hand, continued to fall, as noted by Spyder Gold Trust’s (GLD) 2.2% drop last week.
GLD
.

The Comex Gold futures contract fell 2.5% last week, falling below December lows. 38.2% Fibonacci support from August 2018 low is at 1728.4, 2.8% below Friday’s close. The 50% support is at 1620.4 and corrections often end between the 38.2% and 50% support levels. The declining 20 week EMA is now at 1841.8 which represents strong resistance.

Comex Gold’s weekly OBV decisively broke its uptrend (line a) at the end of January and is now in a clear downtrend. It is also below its declining WMA. The Herrick Payoff Index (HPI) is a key indicator in determining the direction of commodity prices. Comex Gold’s HPI fell below the zero line on January 15 and then breached support from the 2020 low (line b). The daily OBV and HPI (both not pictured) have yet to hit new lows with gold prices, so I’m keeping a close watch on Comex Gold and GLD action.

I still believe that a deeper drop is needed to reduce the high level of hatred and complacency in the market. Therefore, I would collect cash before a correction. The market may still move higher before a correction, but a correction is likely next month. Such a drop should present a good buying opportunity for some ETFs and stocks.

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