Chart of SPY seen below includes dividends, so it did not yet hit a 2-year low unlike the underlying $SPX, but came very close on Friday. SPY is approaching the first resistance level in the $188.50 area. Should that area be breached, the next strong resistance is in the $195 neighborhood.
         Many of the market breadth indicators for $SPX just hit new lows for the move.  The On Balance volume, the Advance-Decline (AD) Line and the AD-volume line are all pushing lower. This is all confirming a long-term bearish posture. As I mentioned above, for now I am treating this rebound as a counter-trend rally.
         What will it take for me to turn bullish? We need to see a strong, broad rally that would turn many of the indicators I am watching into the bullish territory. Then a pullback would provide for a good entry opportunity for me.
CHART OF SPY
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Many gaps on the chart of SPY dating back to as far as 2010 remain unfilled. An old Wall Street saying goes something like: “The market abhors a vacuum and all gaps will be filled.” Should this entire gap filling process materialize, we could see a drop of another 47% from today’s prices for SPY.  This would translate to $SPX bottoming out somewhere around 1100 (not a prediction).
Unfilled gaps on chart of SPY
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Bonds clearly benefited from all the turmoil in stocks and hit all-time highs this week. Worried investors simply want to return their capital. A return on capital takes a backseat during the bear market periods. TLT hit an all-time high at $135.25 (adjusted for dividends) and then pulled back on Friday. We now have a possibility of an Evening Star pattern on many bond charts, TLT included. Bonds moved powerfully off the November/December lows, so a pause in price gains could be upon us.
CHART OF TLT
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Long-term bonds and Treasuries still look very bullish and a breakout with a close above all-time highs looks possible.
LONG-TERM TLT CHART
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In the currency trading community there was lots of chatter of late about a reversal in the US Dollar. To me $USD chart still looks bullish. Most likely US Dollar bulls have already stepped in on Friday and this short trading week will likely see the dollar rebound to around the 200-day moving average.
CHART OF $USD
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         On to the touchy subject of “has gold finally ended its bear market”? The short answer to that is: I don’t think so just yet.
Now the long answer…
         Gold bottomed out in early December of last year at $1045.40. If you were lucky enough to buy at the very bottom and exit at the very top in just 2 month, you would have made around 21%. One doesn’t have to be a market professional to see that gold is extremely overextended to the upside in the short-term. So even the ardent gold bugs would agree that at the very least a short term pullback is in order.
GOLD CHART
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 From a longer-term perspective, where would this pullback take gold? I drew in Fibonacci retracements from the December bottom to this Thursday’s top. As you can see, a normal pullback can take gold back down to at least $1180, or even lover to $1130. A deeper pullback below $1130 would most likely indicate a failure of this possible breakout and a retest of multi-year lows.
LONG-TERM CHART OF GOLD
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Gold miners of course move a lot more then gold and are up a little over 50% since bottoming in early January. This advance is extremely steep.  Should gold roll over, GDX is surely going to follow in its steps, albeit in its normal volatile fashion.
CHART OF GDX
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Looking at the weekly GDX chart going back 5 years, we can see that GDX had similar breakout attempts in the past. Ultimately these breakouts failed and we saw new lows in both gold and GDX. Will this time be different? LONG-TERM GDX CHART
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​Next chart shows that we are not yet in a new bull market for gold. According to the parameters I follow, at the very least we need to see two of the following:
1.A 50-day moving average cross above the 200-day moving average
2.Bullish Percent index surge above 80
3.My in-house Gold Miners in an uptrend indicator cross above the bullish threshold.
As of the close on Friday, February 11 there were zero of the above three in the bullish camp. Until more improvement manifests, I will treat this “breakout” as a bear-market rally. 

Oil got a big oversold bounce on Friday. The bigger picture is still rather bearish, but a rally to around $35 cannot be excluded. There is a lot of overhead resistance in that area from the broken support and the failed rally attempt in late January.
CHART OF $WTIC
Interestingly, the Brent benchmark for crude oil did not make a lower low, unlike its US West Texas Intermediate counterpart. We could potentially read it as a bullish divergence.
CHART OF $BRENT CRUDE
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NATGAS seems to have failed at resistance just at the 50-day moving average and is attempting to break below the early February lows. Should it succeed, a retest of multi-year lows is very likely.
 
CHART OF NATGAS
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That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)

I marked the chart of SPY with a possible Rising Wedge formation and a possible wedge break on Friday. I say “possible” because it is very difficult to draw a rising wedge due to the spike low from January 20th. Rising wedges in a bearish security are continuation patterns, so a wedge break to the downside signals more downside to come.
CHART OF SPY
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​         Of note this week is the relative weakness in the higher-beta NASDAQ 100 ETF – QQQ. Several negative issues with this chart include:
1.Imminent Death (bear) cross of the 50-day moving average crossing below the 200-day moving average
2.Friday’s close took the ETF below its September 2015 lows
3.Relative weakness compared to the universe of other ETFs
4.A new low in the Advance-Decline Volume line
Weakness in technology is very negative for the general market because the technology sector accounts of over 20% of the stocks within the S&P 500.
CHART OF QQQ   

The broader NYSE Composite index is showing a similar patter to the $SPX. I pointed out an inverse Cup and Handle pattern on the chart of $NYA a few weeks ago. $NYA hit multi-year lows in mid-January, but as I said, this inverse Cup and Handle pattern doesn’t feel complete yet, since it only dropped 6% following the breakdown. If $NYA turns around and continues lower, we can easily see at least 10% drop from Friday’s prices before any meaningful bounce occurs.
CHART OF $NYA
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Bonds are benefiting from all the stock market turmoil and are continuing as the market leaders. TLT (Long Treasury bonds) broke out in January. Then again, TLT gapped up just this Tuesday to hit a 52-week high on Wednesday. For now the gap-up is holding. Treasuries are the ultimate safe-haven assets, and strength in the government bonds coupled with a weakness in the stock markets is reinforcing my risk-off posture.
CHART OF TLT

The long-term picture for TLT looks even better right now. TLT closed above the possible Cup and Handle pattern on the weekly chart. Should this Cup and Handle play out, we could easily see a challenge of the all-time highs set in the early 2015. The depth of the pattern is indicating that TLT could go well above those highs.
LONG-TERM TLT CHART
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Utilities also broke out above the October resistance and are approaching all-time highs. Undoubtedly this is due to the overall risk-off environment as investors are rotating out of the high-beta stocks into the low-beta utilities.
CHART OF UTILITIES
Please keep in mind the utilities are still stocks and thus correlate highly to the general market. If a true pandemonium starts and investors try to unwind their long positions, utilities will also get sold. Notice on the chart below that various stock funds move more or less together and correlate highly to the general market. I purposefully picked the most uncorrelated ETFs to the general market to prove a point (XLF, XLI, XLK, XLY correlate even higher). Even Utilities, Consumer Staples and Energy will get sold during the market routs – there is no place to hide in stocks.
ASSET CORRELATION TO SPY

The Dollar index got slammed this week, as Euro and the Yen was able to make substantial gains against the dollar. For now I still think that the dollar index is bullish and dollar bulls will step in very soon. Dollar weakness was especially helpful for gold.
CHART OF $USD
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I pointed out a possible Cup and Handle pattern on gold chart a few weeks ago and this pattern seems to be playing out. My subscribers were warned against shorting gold/GDX this week, as I didn’t feel like this pattern has played out just yet. Without a doubt, gold is overbought, but could push higher to the $1190 area to complete this pattern. There is a lot of resistance in the $1190 area from the October peak, so that would be a logical place for the bears to step in.     
GOLD CHART

Even after this week’s gains I think that long-term gold is still in a bear market and it would take a lot more to reverse it.
         There are various ways of identifying the long-term trend of a security. One of the most common ways is to look at the 50-day simple moving average and the 200-day moving average. If the 50-day is above the 200-day, then the security is bullish and vice versa. This technique works OK most of the time, but it does occasionally produce whipsaws (false trend changes).
I presented my experimental Gold Miners in an Uptrend Indicator (GDXIND) last week. This indicator looks at a basket of gold miners and their trend indicators and attempts to quantify the signals. If a bullish signal is triggered, a bullish bias is maintained until a reversing bearish signal supersedes its. GDXIND gave a bearish signal in early 2012 and is yet to reverse direction.
         Similarly data exists for the Gold Miners Bullish Percent Index ($BPGDM) going back to 2008. In the life of a market this is not a terribly long time period, but nevertheless $BPGDM does produce useful signals. $BPGDM gave a bearish signal back 2011 and it too is yet to reverse.
         GDX itself just broke above the 200-day moving average and was able to close above the October highs – certainly a positive sign. The Advance-Decline lines and the On-Balance volume indicators are also showing a good participation. As with gold, I can unequivocally say that GDX is now overbought. GDX is ripe for either profit taking, or an outright bear attack, especially if the dollar rallies from here.
CHART OF GDX

Looking at the weekly long-term chart of GDX I can see at least 4 similar looking “breakouts” that ultimately resulted in a reversal and fresh 52-week lows.
Bottom line: We need to see a significant improvement in GDX market breadth, and a trend change in gold before a bottom in gold prices could even be contemplated.
LONG-TERM GDX CHART
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 Oil had what looked like a Bullish Engulfing pattern on Tuesday/Wednesday, but failed to confirm the pattern with higher prices so far. Long-term oil is bearish, and sold-off on Thursday and Friday despite a weaker dollar.
CHART OF $WTIC
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Natural gas had a possible Rising Wedge break to the downside this week and pushed lower. However Friday’s action leaves much to be desired for the NATGAS bears (like me). There now seems to be a slight bullish divergence between the price itself and the On-Balance volume indicator. Maybe NATGAS will attempt a throwback to the 50-day moving average, around 2.14 before resuming its downward march?
CHART OF NATGAS

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That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)