Wimpy End To Yet Another Strong Month

 | Feb 28, 2015 11:58PM ET

T2108 Status: 63.9%
T2107 Status: 52.8%
VIX Status: 13.3
General (Short-term) Trading Call: Mildly bearish – STILL waiting to see what happens when/if T2108 becomes overbought. Solidly bearish on a S&P 500 close below 2085.
Active T2108 periods: Day #90 over 20%, Day #49 above 30%, Day #29 over 40%, Day #11 (corrected) over 60% (overperiod), Day #160 under 70%

Commentary
Friday was another day of very marginal moves, except this time the S&P 500 (via the SPDR S&P 500 (ARCA:SPY)) declined while T2108 gained.

The S&P 500 ends its primary uptrend on yet antoher very marginal move

The volatility index surprisingly closed lower, now at a fresh 2 1/2 month low. Earlier, I thought the volatility index, the VIX, was getting ready to hop back over the 15.35 pivot.

Volatility surprisingly closes on a down note

Although February ended with a whimper for the S&P 500, the month was overall very strong. The index gained a very respectable 5.5% gain. This strong gain motivated me to zoom out and take a look at the market from a longer-term view. This monthly chart of SPY shows the sheer persistence of this run-up. Note the uptrend distinctly defined by the two upper-Bollinger® Bands (BB).

The very definition of persistence and TREND

This chart is VERY humbling. It tells me that buy and hold is far from dead. It reminds me how the market “wants” to go up. Most importantly, it demonstrates that the current uptrend is little different from the uptrend that defined the last long-term run-up. If THIS run-up is anything like the last, then we have at least another year or more to go for this rally (eerily enough, that would position us for another major sell-off to mark a change in U.S. presidential regimes).

In 2003, SPY first re-entered the space between the monthly upper-BBs. The ETF pretty much stayed there until the end of 2007. The current post-plunge market took a few attempts before it latched onto its uptrend. Since mid-2012, SPY has pretty much stayed on-trend. This view gives me some insight on how to better time shorts (at the top of the channel) and longs (at or near the bottom of the channel). Here is a close-up to make clear the channel behavior:

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Persistence in motion

That deep plunge to the 20-month moving average was the sell-off in October. This view makes plain how that selling was a stark outlier in the middle of the overall trend.

OK. Enough of the long-term stuff. Back to what we have immediately in front of us. Here are some telling charts.

h3 Facebook/h3

This chart says a thousand words. Did Facebook (NASDAQ:FB) just triple top? This past week, FB looked like it was finally regaining momentum to make another breakout attempt. The high volume selling on Friday was quite surprising to me. Even though the stock remains within an uptrend channel, the selling seems to confirm the third point of a triple top.