Major Averages Straddle New Monthly Levels During Topping-Out Pattern

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-1128614263&q; src=&q;×0.jpg?fit=scale&q; data-height=&q;657&q; data-width=&q;960&q;&g; (Photo by Johannes Eisele/AFP Getty Images)

Based upon new monthly levels from my proprietary analytics, new highs for the five major averages appear to be unlikely in March .

&l;/p&g;&l;ul&g;&l;li&g;The &l;strong&g;Dow Jones Industrial Average&l;/strong&g; has a monthly risky level for March at 26,540, which is below the all-time intraday high of 26,951.81 set on October 3. Today&a;rsquo;s reversal has the average below my annual pivot of 25,819.&l;/li&g; &l;li&g;The &l;strong&g;S&a;amp;P 500&l;/strong&g; set a new 2019 high of 2,816.88 yesterday morning versus my monthly pivot at 2,811.3 for March. Today&a;rsquo;s price action will be a &a;ldquo;key reversal&a;rdquo; given a close below Friday&a;rsquo;s low of 2,787.38. My annual risky level of 2,867.1 is below the all-time intraday high of 2,940.91 set on September 21.&l;/li&g; &l;li&g;The &l;strong&g;Nasdaq Composite&l;/strong&g; set a new 2019 high of 7,643.65 yesterday morning then reversed direction. A close below Friday&a;rsquo;s low of 7,540.75 would be a &a;ldquo;key reversal.&a;rdquo; My value level for March is 7,478. The Nasdaq is well below its all-time intraday high of 8,133.30 set on August 30.&l;/li&g; &l;li&g;The &l;strong&g;Dow Transportation Average&l;/strong&g; stayed below its 200-day simple moving average of 10,562.25 yesterday morning with my risky level for March at 10,752. Transports are well below its all-time intraday high of 11,623.58 set on September 14.&l;/li&g; &l;li&g;The &l;strong&g;Russell 2000&l;/strong&g; opened Monday with a failed test of my annual risky level at 1,590.63. The small-cap average is back below its 200-day simple moving average at 1,587.36 with my value level for March at 1,501.79. The Russell 2000 is well below its all-time intraday high of 1,742.09 on August 31.&l;/li&g; &l;/ul&g;&l;strong&g;To sum it up: &l;/strong&g;My neutral zone for March is between my monthly value levels at 7,478 on the Nasdaq and 1,501.79 Russell 2000 with a monthly pivot at 2,811.3 on the S&a;amp;P 500 and monthly risky levels at 26,540 on Dow Industrials and 10,752 on Dow Transports. Staying within these boundaries prevents new highs.

&l;strong&g;Here&a;rsquo;s Last Week&a;rsquo;s Scorecard&l;/strong&g;

&l;img class=&q;size-full wp-image-59539&q; src=&q;; alt=&q;&q; data-height=&q;489&q; data-width=&q;896&q;&g; Scorecard For Last Week

The Dow, S&a;amp;P 500, Nasdaq and Russell 2000 now have overbought weekly charts with 12x3x3 weekly slow stochastic readings above 80.00 on a scale of 00.00 to 100.00. Transports remain below the overbought threshold.

&l;strong&g;The Fed continues to tighten by unwinding its balance sheet. &l;/strong&g;The Fed balance sheet was marked at $3.974 trillion on February, 27 down from $2.981 trillion on February 20. The balance sheet is now down $526 billion from $4.5 trillion where it was at the end of September 2017. In my opinion, Fed wants to continue to unwind the balance sheet until later this year. I believe that they are aggressive now given market strength.






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