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Weekly S&P500 #ChartStorm - 17 Mar 2019

Those that follow my personal account on Twitter will be familiar with my weekly S&P 500 #ChartStorm in which I pick out 10 charts on the S&P 500 to tweet. Typically I'll pick a couple of themes to explore with the charts, but sometimes it's just a selection of charts that will add to your perspective and help inform your own view - whether its bearish, bullish, or something else!

The purpose of this note is to add some extra context and color. It's worth noting that the aim of the #ChartStorm isn't necessarily to arrive at a certain view but to highlight charts and themes worth paying attention to.

So here's another S&P 500 #ChartStorm write-up!

1. S&P500 Status Check: First up is a quick status check on the S&P500's latest price action. This past week brought two key short-term milestones for market; first the downside test of the 200-day moving average failed, second the index finished above the key 2800 level. This of course does not preclude another test to the downside, and the coming days and weeks will tell whether the tentative breakout can be sustained, but with these two hurdles cleared it's points scored for the bulls.

Bottom line: The S&P500 broke back above the 200 day moving average and the 2800 level.

S&P500 downside break of 200dma failed, 2800 cleared

2. S&P500 200-day moving average breadth: Since we're talking about 200-day moving averages it's salient to also explore the market breadth picture, and from first glance it's not nearly as convincing as the previous chart. For starters, only 55.6% of S&P500 components are trading above their 200-day moving average, and for the technicians, the breadth indicator is displaying short-term bearish divergence against the index (higher highs on the index vs lower highs on the breadth indicator).

This divergence can be resolved in a benign fashion by breadth simply improving, but it's enough to cast some doubt on the short-term outlook.

Bottom line: Market breadth presents a less convincing picture for the short-term outlook.

3. Change in real yields vs the S&P500: Staying with the short-term outlook, here's another ping against the previous pong, this chart shared by Francesc Riverola of FXStreet.com, shows how the movement in the US 10-year real yield provides a slight lead on performance of the S&P500. In that respect it's saying the market still has a little steam left, with the lead indicator pointing to positive rolling quarterly performance through April. But again, that leaves us guessing on the outlook further out.

Bottom line: The movement in 10-year real yields points to positive short-term performance.

S&P500 leading indicator - real yields

4. Broker Dealers & Exchanges relative performance: One observation from Tom Bruni of All Star Charts will certainly add some doubt to the outlook (another pong against the previous ping!), this chart shows the relative performance of the broker dealers and exchanges sector - a sort of super-cyclical sector which is highly sensitive to changes in the market/cycle. The relative performance line is clearly challenging that support zone, and a break to the downside will be points scored for the bears. This is definitely one to add to your radar for the coming weeks.

Bottom line: The broker dealers and exchanges sector has been underperforming; a bad sign.