Marginalia

Given that the US markets have only backed of their highs by a few fractions of a percent the breadth on Bulkowski's indicator is looking particularly weak!

NAAIM sentiment is still way up there...

The Russell is lagging with a clear divergence but the COMPQ is on a tear. Who to believe? I tend to favour the R2K...

The McClellan Oscillators have lagged for some time now...

The cumulative NYAD says that we're a long way from THE top though.

False break on the VIX?!

Very rare to see it down so low...

The XJO/XAO rallied up to a 50% retracement at the end of last week (no chart).

Keep in mind also that the Jupiter-Uranus opposition will be exact on March the 2nd and fits well with other cycle forecasts for a low around that time.

In conclusion... I'm a patient bear!!

7 year itch

A bit of Gann....

7 years ago in 2010 the major indices made a high in early January and then dropped into mid February.

2 x 7 years ago in 2003 also saw an early January high followed by a drop into mid February (SPX only in this example) and mid March.

Gann is also widely quoted for saying that 7 is a 'fatal number' so given that this is a '7' year it's worth considering some past examples. The following immediately come to mind:

1907
1937
1987
2007

It would be nice to have some more examples but in each of the above the most significant part of the decline came after the 7th month (July).

1907 "Bankers Panic"

1937 (market went slightly higher in August)

1987 (market also went slightly higher in August)

2007 (Although it pales compared to 2008 the drop into the August low got everyone's attention at the time.)

I believe that 1957 (70 years ago) also had a drop from midyear to the end of the year (no chart available unfortunately).

Food for thought....

charts and chat

First the SPX oscillators...

The same divergences of one week ago are still there, and now with another divergent high.

At Friday night's high the SPX traded higher while the market breadth traded lower! Very rare and was also evident in the Russell 2000 taking a dive at the same time.

(Sentiment Trader on Twitter tells us that the 24th of March 2000 was another example.)

Despite the bearish breadth on Friday the cumulative NYAD still says that higher highs should be expected.

The Bullish Percent indicator is also in decent shape.

NAAIM sentiment is still sitting around 100. This level of bullish sentiment is losing its' 'wow' factor... which is perhaps an indication in itself, but only hindsight will tell.

The Equity Put/Call ratio really is going the wrong way if the market is looking for a top.

The VIX is contradicting the CPCE though and hit 11 on Friday night. This is a reasonably rare level for a VIX low.

That VIX level is worth zooming out on, so I did.

It probably makes a better direct VIX trade than using it as a proxy for an SPX high. There is a definite correlation there though, even if it's not 100%.

update

Bulkowski's CPI indicator is showing a larger deterioration of breadth than conventional indicators at the moment:

NAAIM sentiment is up over 100 again! It has been 80+ for the whole of the rally since the Trump election low. How long can it go on?!

The McClellan Oscillator has dropped below zero, turning the Summation Index down with it. Divergences are now in place for both indicators.

It's looking more and more like a fairly decent high is now in place. This could perhaps even be "THE" high however if that proves to be the case then the major downdraft will still not be expected until much later this year.

The 2000 high was the endpoint for one of the strongest bull markets and was followed by a 6 month distribution pattern so something similar should be expected here if the market doesn't make any new highs this year.