Market Direction and Stock Trends

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• • • Peek Into Future Through Futures • • •

* March 11, 2017

Following futures positions of non-commercials are as of March 7, 2017.

E-mini S&P 500: In the week ended Wednesday, U.S.-based equity funds attracted another $8.5 billion (courtesy of Lipper), but was no use. The S&P 500 (cash) lost 0.4 percent last week. The ones that began gravitating toward these funds in prior weeks are sitting pretty, though. Post-election, $60.6 billion went in, during which the S&P 500 rallied nearly 12 percent.

Incidentally, the bull this week completed eight years.

Similarly, SPY, the SPDR S&P 500 ETF, attracted $2.1 billion, and $23.4 billion post-election (courtesy of ETF.com).

This was the first down week in the last seven. Remains to be seen if this would act as a deterrent from the flows perspective. Thus far, the index is only 1.2 percent off the all-time high reached on March 1 (2400.98), but it is likely setting up for a bigger drop.

The cash has been under pressure since that record high. Last week’s reversal-like candle has been followed by this week’s hanging man.

Currently net long 137.6k, up 51k.



Nasdaq 100 index (mini): QQQ, the PowerShares Nasdaq 100 ETF, continues to attract money. In the week ended Wednesday, $412 million came in – third straight week of inflows (courtesy of ETF.com).

Bulls continue to defend the 10- and 20-day moving averages.

Short interest on XLK, the SPDR technology ETF, remains elevated.

Currently net long 74.8k, down 9k.



Russell 2000 mini-index: Of the four major U.S. indices (the other three being the S&P 500, Dow Industrials and the Nasdaq composite), the Russell 2000 (cash) is the first one to lose the 50-day moving average post-election.

In the week ended Wednesday, IWM, the iShares Russell 2000 ETF, lost $95 million (courtesy of ETF.com). This followed outflows of $1 billion in the prior two.

Bulls need to save 1347. A failure would mean overbought weekly conditions would continue to get unwound. (Fell to 1356.69 intraday Friday before finding bids.)

For the first time in 17 weeks, non-commercials are now net short.

Currently net short 12.3k, down 32k.



US Dollar Index: On December 15 last year, two-year T-notes yielded 1.29 percent, and the dollar index (cash) closed at 103.11. Thursday, they were respectively 1.37 percent and 101.72. The latter is having trouble keeping up. Either it does not believe the rise in two-year yields is sustainable or simply that a strong currency is not conducive to the U.S. economy, let alone emerging economies that are heavy in dollar debt.

At least near term, the cash is itching to go lower.

Currently net long 51.1k, up 6.2k.



VIX: One more weekly doji on the cash – third in the last six weeks. In the meantime, the 50-day moving average is flat to slightly rising. With the average at 11.71, which itself is at the low end of a multi-year range, odds favor it begins to rise from here. That said, the 200-day is still dropping.

Currently net short 99.6k, up 6k.



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