Market Health Tracking

Investing Strategies Technical Trader's Sanctuary
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In medicine, we lean heavily on the natural history of a disease to anticipate the course and adjust therapy. We also have to take into account any comorbid conditions. Pneumonia in someone with comorbid immunosuppression, etc. Some conditions make the disease more volatile, unpredictable or even more deadly. The maket is a bit like that. I try to look at the chart and think about the natural history based on similar chart patterns and think what might occur. The hard part is trying to weigh in the comorbid conditions, old and now brand new, and guess what might happen. It’s exasperating to try and predict under current conditions. Words from lips that have no legitimate (let alone legal) reason for uttering them can sink ships or rain crypto. We are at an interesting point. Not “The Precipice,” as god knows we’ve already dropped down a few, but it’s interesting in that the overhead supply from the first of November to early February is likely used up. What will happen tomorrow?? Nobody knows, certainly not I, but looking at the chart and ignoring that stupidity could rear it’s ugly head, we are at a bounce point or drop.

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QQQ doesn’t have much resistance until 484-485 level. Spy until 575 or then 565. Does that mean it’s where we’re headed? Who knows, but it may be. Yet, look at the RSI’s. QQQ often bounces at around 30. Spy likes 35. Does that mean we’ll bounce? Who knows. Too many comorbid factors to digest.

Personally, wouldn’t be surprised by a small bounce, but next week is still the concern. I’m still bullish, just guarded. My PGR got closed yesterday by my stop, but I may have to reenter tomorrow. And I was pleasantly surprised by a forgotten position of BROS in a HSA account (I know, lattes in a health savings account…forgive me father, for I have sinned…). All of this is chicken feed compared to real life.

Wishing all health and happiness, above capital gains,
Lakedog

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Dang, how could I forget to mention the VIX?!?! Just for the record: 21.13

Looking at some upper levels, zones I usually don’t bullishly trade, but not capitulation by any means.

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2/28/25 (Fri) Upside reversals! Recommended Exposure 20-40%

Naz had an upside reversal off the 200dma, SPY just reversed up. For the Naz, Webby calls this a “textbook bounce off the 200dma”. Both still below the 50dma. This marks the first day of an attempted rally. (we had a pink rally day two sessions ago, but it was undercut). Now we look for a follow through day on (trading) day 4 or beyond. Webby is slightly optimistic but understands things can shift in a day.

Lots of follow throughs don’t work, but we always act on them. You just don’t press the gas hard at first.

If we roll over on the SPY and can’t hold the 200dma, then “we could be in for some serious problems”.

Webby says, RSP has formed a cup with handle and there was a shakeout in the handle "this is textbook good." Friday was an upside reversal from the shakeout low in the handle, so if the RSP rolls over and goes below that, it would indicate a trip to the 200dma.

Webby RSI (Real Simple Indicator using ATRs from 21dma), shows what most people call oversold conditions for Naz. We are the at the largest ATR distance below 21dma since Aug 5, 2025. So that gives him a little optimism. Bill hated the term oversold because oversold a little bit could become way oversold pretty fast.

Bob Marley charts have gone into the yellow.

CrowdStrike (CRWD), Marvell (MRVL), Broadcom (AVGO) are set to post results amid tech-sector selling. Retailers such as Costco Wholesale (COST) also are in the days ahead.

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They are trying hard today. Strong futures in the AM, small gap up open, then fast ugly reversal. I was not around at the open so I set up order to sell my SARK and RWM at the open. Got the worst possible price and ended up buying them back later. Friday’s “attempted rally” has been undercut and will probably remain that way as we are likely to close at the lows of the day. SwingTrader still has on some longs, including QLD the 2xQQQ sitting at 3.5% loss on their books. I will surprised if they still hold it by the close.

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3/3/25 (Mon) winter is coming.

Markets were bludgeoned today when Trump said the 25% tariffs are still on. Futures were up and market had a little gap up, as might be expected after Friday’s strong finish, but it did not last long. The markets and many stocks reversed down and finished near lows. The Naz and S&P had outside (down) days. The Naz finished below the 200dma and the S&P seems headed that way. The Nasdaq composite rose as much as 0.8% in early trading, but closed 2.6% lower. At one point, it was down more than 3%.

Small caps — which are more sensitive to the U.S. economy — remained adrift, with the Russell 2000 wiping out all of Friday’s gains and marking a nearly six-month closing low with a 2.81% loss.

The 10-year note’s yield fell five basis points to 4.178%, the lowest since Dec. 6. The benchmark yield is now below its 200-day moving average. In the recent past, falling rates have been good for stocks and particularly the small caps, but not right now.

No positive signs that I see today. No capitulation lows with a big upside reversal into the end of the day. No support at major trendlines. Closed near the bottom, so it would be normal and natural to continue the decline tomorrow, but we should have continued Friday’s move up today.

IBD lowers exposure to 0-20%, which is the equivalent of “market in correction”. SwingTrader sold out all positions before the close. They had on QLD (2x QQQ) from Friday’s strong move. Oops.

Traders should have a lot of cash.

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3/4/25 - Market In correction

We started the day down and had a decent upside reversal. Did not feel like a capitulation day to me. I still remember that feeling on 3/9/2009, and that is not what yesterday felt like. To be fair, that was after a very long decline, but our recent sell off was nothing compared to that. But we take it day-by-day and see what happens.

○ After an ugly downside reversal Monday, the Nasdaq composite pared a 2.1% morning loss to nearly 0.4% by the close.

○ The S&P 500 came very close to a test of its 200-day moving average, closing with a loss of 1.2% after falling 2% intraday.

○ A couple of daily market indicators on the Nasdaq don’t look so hot. The 10-day moving average of stocks rising in heavy volume has been falling, while the 10-day moving average of stocks falling in heavy volume has been rising. The 10-day moving average of new highs has been declining, while new lows have been rising

○ Most leading growth stocks have been hit hard by institutional selling. That means many are in the very early stages of forming new bases. It also takes time for new leadership to come into better focus.

○ Commerce Secretary Howard Lutnick said after Tuesday’s market close that President Trump may roll back tariffs on Mexico and Canada as soon as Wednesday. (Maybe Trump cares more about the market than his tariff promise)

○ The stock market is in a correction, with the major indexes and leading stocks heavily damaged. Tuesday showed why investors should get excited about an intraday bounce.

Futures rose late Tuesday after Commerce Secretary Howard Lutnick said that President Trump may roll back tariffs on Mexico and Canada as soon as Wednesday.

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Not sure exactly by what you mean to get excited. Excited to buy or excited that something bad could happen?

I have a bad feeling about the late afternoon crash. That strikes me more like a sign of weakness than strength.And while today is suggesting a day of strength, I’m in the camp of “Believe, but confirm.”

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Lakedog
Still bullish, just not invested at this moment

2 min followup: Just as I clicked the “Copy Chart” button, we got a 5 min bearish candle…time will tell

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I left out the important word NOT. Sorry. Should NOT get excited

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3/5/25 - Trump hints at tariff delay, bulls come out and play.

The markets started on a sour note when the ADP private payrolls report came in at 77,000 net new jobs created in February. That fell well below the consensus forecast of 162,000 job additions.

But around noon, word leaked out that Trump might delay the 25% tax on automobiles form CA and MX. From there, markets reversed up and closed near their highs for the day.

The Naz retook the 200dma, meanwhile, the S&P 500, as well as the Invesco S&P 500 Equal Weight ETF (RSP) and First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW), rebounded from that key level.

The last time the Naz tested the 200dma (Aug 5, 2024), it held and rebounded to start a 29% bull run. This time we came up from below the 200 and there remains a lot of uncertainty in the market, especially around tariffs. Will Trump continue to back off if the markets sell off, or will he stick to his guns and let the market fall? He is known for using the stock market as a voting machine. It could continue to be a bumpy ride.

IBD says we are in day two of a new “attempted rally”, that means they interpret yesterday’s slight upside reversal as day one, not something that would have happened if we finished near the lows. Most FTDs come in day 4-10, but there are a couple notable exceptions. IBD urges us to build our watch list and to focus on stocks with a high RS that shows they are outperforming this down market.

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3/6/25 - Market still in ICU.

Recommended exposure remains at 0-20% and will not doubt remain so until an FTD.

Today the S&P undercut its recent low to end its attempted rally and the Naz barely avoided that fate. There few to no good growth stock setups. Many leaders from previous rally are under their 50dma. Defensive plays like GDX and Insurance companies reinforce the flow of money out of growth. Look for stocks with high RS to add to your watch lists. UBER has a nice cup with handle and has been trading pretty flat in the handle.

IBD:

Now is not the time to be raising exposure in growth stocks. Doing so would be fighting the current stock market trend. Instead, keep an eye on market leaders holding up relatively well

The Labor Department will release the February jobs report at 8:30 a.m.

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I’ll summarize my timing dashboard as follows:

  • every intermediate timing signal I follow is red with the exception of BC SMA Slope and BC 99D and the (nearly meaningless) seasonal timing signal.
  • short term signals are all bearish except those firing at tops - because there hasn’t been a top in about 7 weeks.
  • this all went red in 3rd week of Feb, of course. It’s Tariff Time! Total score went back to -7 after a nice quick rebound from the year-end '24 sharp selloff.
  • Of note on the BCs, all US asset classes are nearing Neutral on the SMA Slope; and are bearish on the weekly and daily PPO/MACDs. The worst is SmallCaps. They have all dropped to below or flat with their 33-week MAs.

EAFE is on a run to the upside.

FWIW I have been 15% Large Cap and 10% EAFE since 4th week Feb and the rest high yield income and cash. (and 2% short TSLA).

A right bloody tantrum mate!

Perfchart all:
https://stockcharts.com/freecharts/perf.php?SPY,MT…

Title Credit: https://youtu.be/Rnug2Qd_Ijs?t=17

Truly, good luck setting your bottom fishing “Crazy Eddie” limit orders,
FC

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3/7/24 (Fri) Another Rally Attempt

Friday was day one of a new attempted rally, but that does not mean Monday won’t ruin the attempt.

Friday’s bounce was nice, but whipsaw action is common in this headline-driven market. The major indexes have staged three upside reversals in the last six sessions, with 1%-plus gains in the first two. But so far those have been blips in a sharp downtrend. Wait for the market to show sustained positive momentum. That could come next week, next month or even next year. The key is to be ready when that happens.

The S&P 500 index lost 3.1%, testing its 200-day line, but closing above. The Nasdaq composite plunged 3.45% and remained below its 200dma. The small-cap Russell 2000 sold off 4.05%, both hitting five-month lows.

Friday Video With Webby, my show notes

○ On the Naz, what we are seeing now (big swings) is typical of what we see in an intermediate correction or a bear market and you never know which one until it happens.
○ “We” focus on the Naz, but the rest of the world focuses on the S&P and it is finding support at 200dma. The S&P had an upside reversal Friday. Wednesday looked like one, but you have to go below the low of the day before to count is as an Upside Reversal. We got that on Friday.
○ On 2/28, the Naz had a beautiful upside reversal off the 200dma, but the next day, fund managers came in and dumped nazzy stocks, causing an outside down day. So, what better time to dump then after a huge up day. This says they were not ready to hold or buy for the next leg up. So don’t get too excited about this one on the S&P.
○ Webby reminds us that Bill came up with the FTD because you never really know what the real first up day is. A single upside reversal is not enough. Give it time to take hold (3 days or so) then look for a confirmation of that first day (attempted rally) with a FTD on day 4-10 (usually).
○ Take a look at the various overseas ETFs, it looks like money is flowing from US markets into these (e.g. EFA)
○ Webby is all cash. Was trading some gold and China, but wanted to be all cash for the weekend.
○ Weekend study, look at S&P and Naz weekly charts and notice the times where they were down 3 weeks in a row.
○ It is good that we closed well off the low this week and last week. But the candles are not showing a bottom.

Webby’s Bob Marley indicators are ugly. His “RSI” are not quite bad enough to indicate immanent reversion to the mean

Recommended exposure still 0-20%

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3/10/25 (Mon) - Markets puke up a lung.

Markets all below 200dma, Nax more than S&P. If you look at the weekly for the Naz, you will see this is the worst break of the 200dma since the rally started in Dec of 2022.

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This should certainly mean the recovery will take longer than it did the last two times marked on the chart. Will we get 3 waves down, like in late 2022?

Vix is at the highest since the Aug 5 dump, but that was really high.

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Looking at the monthly VIX, shows that 48-50 range and been the top of many a decline. COVID and the Real Estate bubble we two major exceptions.

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On Monday, Goldman Sachs downgraded its economic outlook and cut its GDP outlook for 2025 to 1.7% from 2.4% and noted that “trade policy assumptions have become considerably more adverse” since the start of the year.

Justin reminds us that he learned the hard way to wait for and FTD. In his early days, he got in too early, too often and paid for it.

Start to look for the next crop of leaders. A major decline can be the end of the recent leaders

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Gerstner on CNBC 3/12: This was a great discussion around 7:45am, if you can access a replay or recording, it is worth 15 minutes of your time.

Some comments I remember…

○ First 10% of the market down was adjusting to new tariff reality. Next 10% will account for a recession, if it becomes more certain. He was buying a little NVDA and some other things yesterday, but is not all in. No one rings a bell at the bottom.
○ He does say Trump is negotiator in chief and he intentionally causes chaos and uncertainty to throw off opponents. The other side of the table has to believe he will enforce tariffs. He is not waking up and looking at the market futures and then changing his approach for the day.
○ We have not had a clearing event yet, so the MAG -7 are not buys yet.
○ He believes we can deal with the deficit and debt. He points out that Gov spending typically increases 3% a year, but COVID was a “red bull event” for spending. If you look at the spending level for 2019 and extrapolate that out to 2029, we can easily get back to the expected level with government cuts Trump is trying to implement.
○ If Trump Tariffs will really try to replace 90% of the income tax, that would be a huge trauma to the world economy, but if they are more measured, the impact won’t be so bad. He says Navaro wants the McKinley-style tariffs but Bessent says they will be more punitive and negotiable. Gerstner thinks Trump will be in the middle.
○ China is telling its companies to not absorb the cost of tariffs, but Gerstner points out that unlike MX and CA, China is very highly reliant on exports, so these companies will have to absorb some.

All the CEOs Gerstner talks to are worried about the uncertainty.

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3/12/25 - Deja Vu all over again

Today marked another (new) day 1 of an attempted rally (Naz), but like the last one, it could be nullified in a day.

The CPI came in cool and led to a gap up open, soon followed by a dip down to yesterday’s close. The Naz finally finished up 1.22%

Tesla, Nvidia, Palantir, Micron and AppLovin stock accounted for a huge amount of the Nasdaq and S&P 500 gains. The Invesco S&P 500 Equal Weight ETF (RSP) fell 0.5%, hitting a fresh six-month low

IBD says:

Keep in mind that the first few days of a rally attempt usually see a fair amount of short covering. But if one or more indexes rally powerfully in higher volume on the fourth day or later of a rally attempt, that would raise the likelihood of a more sustained rally. For now, leadership is narrow and actionable setups among growth stocks are in short supply.

Avoid the pitfall of looking to catch former stock market leaders on sale, especially those that have been hit hard by institutional selling in recent weeks. Some will go on to form new bases, while others could stay on downtrends and be dead money for months.

We are looking for a follow through day (FTD) on day 4-10, with at least 1% to 1.25% price gain on volume higher than day before.

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3/13/25 - Good news, just one more trading day this week.

Markets down again, Naz barely misses undercutting the Day 0 low of this attempted rally, but do we really think and FTD will be strong? Not unless there is some crazy tariff resolution that sparks the FTD.

S&P finally exceeds a 10% decline from the top, meeting the accepted definition of a correction. Naz is about 14% off.

Today, Senator Schumer says he will not filibuster the CR, so it can go to vote and get passed, thus avoiding a Gov shutdown. (Which is great for gov employees, because they always get paid for the time off when the shutdown is over).

IBD reminds us…

Now is not the time to be raising exposure in growth stocks. Doing so would be fighting the current stock market trend. Instead, keep an eye on market leaders holding up relatively well.

Protect your financial and mental capital. Do not get excited by one good day.

The mental capital concept is something I’ve only started hearing in the last couple year. I really like that and know how it feels to be over invested during a long decline. Or to get excited and buy too soon, only to see big loss a few days later.

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3/14/25 (Fri) Day 3 of attempted rally

But, there are a lot of signs of weakness and this may just be a bounce and not a new trend. Fed speaks Wednesday, could that spark and FTD.

Friday Video with Webby.

○ Bill invented the FTD to help say when it was time to get back in and is has evolved over the years. But remember that 50% of FTDs fail.
○ Naz barely avoided undercutting the Day 0 low, so now we are on Day 3 and can look for an FTD starting Monday. Usually happen on day 4-10, but can take longer. Need a good up day (1.0% to 1.25% on vol higher than previous day). Bill would always by some test position on the FTD. If they worked, he would add to them. Then we get additional signals, like the 21dma or additional FTDs.
○ After and FTD, we need market to stay above the low of the FTD.
○ NYSE and S&P are just on Day 1 today (3/14)

○ They reviewed some historical FTDs.
○ 11/18/2018 was an FTD that also took the Naz above the 50dma, so you had to nibble. But the next day fell below the 50dma AND below the low of the FTD, so you had to back off. That FTD was a gap up, so Webby was using the gap up low as the low, not the close from previous day. In 2018 and 2022, they looked like this attempt in that all 3 had 4 weeks down in a row and were below the 200dma.

○ Webby says there is hardly anything out that that is in position to breakout if we have and FTD (that can’t be good). NFLX is one of the better looking ones, and it is not that good. Certainly not ready to breakout. META is certainly better.
○ Fed speaks Wednesday, so that could change everything so it might be difficult to buy much before then (Or that could cause the market to just go sideways then have an FTD on that day, or break and go down)
○ And, can we move above the 200dma after an FTD (and stay above)
○ Insurance stocks are doing well, but that is a bad sign as that is where money goes to hide.

UBER: cup with handle, but with wide, loose, deep base. That is not great. But it is at least holding up for now. EPS growth and sales growth are nice. Handle is too steep to buy on the break of the downtrend, wait for it to go above that short shelf. But it did get support at the 200dma and 50dma.
○ S&P weekly candle looks good. Feels like a short-term bottom has been put in|
○ We have had a very sharp downtrend, too steep to sustain, so we are due for a bounce.
○ Webby RSI hit 3 ATR below 21dma the other day, which is usually a time for a mean reversion. But it indicates you should not take this too seriously because it is not a trend change yet
○ Bob Marley charts near or at the low of the yellow zone, very dangerous, want to see us get back up to the green zone
○ Webby says, if there is an FTD, they will act, but they will temper their enthusiasm.

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3/17/25 - No FTD for you!

○ Naz looked like it might make it to a 1% or better close, but it was on weak volume and it did fade at the end of the day, so definitely no FTD yet. S&P had a better day, but it is on Day 2 of an attempted rally. The Naz almost undercut the day 0 low and if it had, it would now be on day 2 instead of day 4. It would go against IBD dogma, but it might be interesting to think of this as day 2 and not buy on a possible FTD tomorrow. That gets you to the Fed talk on Wednesday, which we should probably wait for anyway.

○ A review of equal weighted index ETFs shows that the big tech stocks are weighing down the indexes today.
○ A look at VXUS, VEU, and EFA, KWEB, MCHI, FXI will show that the international funds have an RS beating the S&P and steadily climbing up
○ Check out flag on weekly chart of BABA. TW breakout with blue-dot RS, but very weak volume it closed at highest level in a long time.
○ Chief Executive Jensen Huang will give a keynote speech at GTC on Tuesday. He plans to discuss what’s next in agentic AI, robotics and accelerated computing. Analysts expect Nvidia to unveil its GB300 AI chip at the show.

IBD…

Due to the persistent weak action among the major stock indexes and top growth stocks, investors should be mostly, if not entirely, in cash. That’s a key element of risk management during weak stock market environments. Instead, investors should be creating and monitoring watchlists of stocks that are holding up better than the rest. They could be market leaders when the market trend shifts.

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3/18/25 Rainy Days and Mondays always get me down.

Not a surprise we gave back gains from Friday. No real clearing events, still waiting on Fed and new tariffs. NVDA conference didn’t help.

The Dow Jones Industrial Average declined 0.6% in Tuesday’s stock market trading. The S&P 500 index fell 1.1%. The Nasdaq composite tumbled 1.7%. The small-cap Russell 2000 dropped 0.9%.

Fed speaks Wed 2PM. I don’t find it likely the would spur an FTD.

I wish I could ask Justing do find out how many FTDs occurred below the 200dma and how their success rate compares to other FTDs. I recall in the 2022 decline, there were several FTDs on the way down that all failed, but I didn’t bother to check it out.

IBD:

the risk of a failed FTD would be high

It’s unlikely that the Magnificent Seven stocks will resume their leadership anytime soon. The only stock above its 200-day moving average at this point is Meta.

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3/19/25: No FTD for you!

It looked possible, but the volume increase was not there, and the Naz faded into the close too much, not a sign of strength. There was also a dearth of breakouts, which is not what you expect to see with and FTD.

Furthermore, both major indexes are below their 200dma, not what I want to see. IBD also notes this:

The recent three-week plunge for the Nasdaq composite and S&P 500 had the characteristics of a vertical violation. That means both indexes still have plenty of overhead supply to work through. If more money starts to come in from the sidelines, look for higher volume behind the gains and lower volume behind the declines. Even more importantly, look for an increasing number of stocks to buy.

Keep in mind that a follow-through day should convey power. Even if volume did rise from Tuesday, the Nasdaq closed off highs as sellers came into the market during the final 45 minutes of trading.

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