Technical Analysis

• In last week’s 2/25/25 Compass, we discussed our expectation for near-term downside as the S&P 500 and Nasdaq 100 (QQQ) displayed several bearish short-term developments.
• We said don’t be surprised if there is a test of the bottom of the range at either 5770-5850 or 5600-5670, where we would be buyers
• The S&P 500 and Nasdaq 100 (QQQ) are testing major confluence of support at 5770-5850 and $490-$500, respectively, the first of our potential bottom levels discussed last week.

• Our long-term outlook remains bullish on global equities (MSCI ACWI). Germany and Europe continue to lead, our favorite theme we have been buying since January 9th.
• Near-Term we wouldn’t be surprised to see a pullback to range supports at $116 on ACWI-US and 5770-5850 or 5600-5670 on SPX in the coming weeks, where we are buyers.
• This report was initially sent out Thursday morning, and as of this writing SPX is now testing support at 5850. Bottom potential.

• Our long-term outlook remains bullish as long as the S&P 500 remains above 5770-5850 and 5600-5670 (worst case), and we are buyers at these levels.
• With that said, we see potential for near-term downside based on several developments discussed below.  It likely means at least another 2-4 weeks of consolidation
• If SPX remains below 6100 and 6150 resistances, do not be surprised if there is a test of the bottom of the range at either 5770-5850 or 5600-5670

• Our outlook remains bullish on global equities (MSCI ACWI). We’ve been bullish since early-November 2023, save for a two month period from late-July to late-September 2024 when we were neutral.
• We also believe the U.S. dollar (DXY) and Treasury yields have put in major tops, which is a crucial risk-on signal for global equities.
• With more and more countries breaking out, we remain bullish as long as ACWI-US is above $116, S&P 500 is above 5770-5850, and EURO STOXX 50 is above 5030.

• We are seeing signs that this 2+ month consolidation in the S&P 500 and Nasdaq 100 (QQQ) is ready to break out to the upside. Buy/stay long.
• Part of that is the obvious; both the SPX and QQQ are breaking out to marginal new highs. 
• The other part that has kept us bullish this whole time is that market dynamics have remained risk-on, which we have discussed on a weekly basis.

• Our outlook remains bullish on MSCI ACWI. Discussed in Jan9,2025 report how we viewed the pullback as a buying opportunity and were watching for $116-$117 support to hold on ACWI-US. 
• $116 support held perfectly, and now both ACWI-US and the S&P 500 are coiling just below all-time highs, likely setting up for major breakouts. ACWI is now breaking out.
• DXY and 10-Year Treasury yield are both topping, a crucial risk-on signal for global equities. More and more countries breaking out. Actionable Themes: Technology, Services, Communications, Industrials, Gold Miners, Financials

• Nvidia set a new record for the largest single one day loss of market cap, losing 700 billion on a 17% down move
• Market risk is about being wrongly sized and underestimating volatility, diversifying assets such as gold, Bitcoin, and broad market put spreads is recommended
• Financial market insurance is not like hurricane insurance, as exposures within markets are interconnected and risk can be amplified when positions are crowded

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• As discussed throughout January, we believe that tariffs will mostly be used as a negotiation tactic, and much like Trump’s prior presidency, will be much less impactful than feared.
• We reiterated this in yesterday’s pre-market ETF Pathfinder (Feb.3), also noting “we anticipate the Canada/Mexico tariffs to be resolved quickly, and we view the latest pullback as a buying opportunity.”
• Sure enough, both Mexico and, later, Canada, came to an agreement with Trump to delay tariffs for 30 days. Short-term support remains at the prior 1-month downtrend on the SPX.

• DeepSeek appears to have turned the chatbot market upside-down, putting pressure on AI-linked stocks. The dust has yet to settle, but the selloff has been largely contained to AI-linked stocks.
• The rest of the market did not seem to care; the equal-weighted S&P 500 was roughly flat yesterday.
• Additionally, market dynamics remain healthy. Bottom line: as long as the S&P 500 remains above 5600-5670, our long-term outlook remains bullish.

• Our outlook remains bullish, and since late-December we have been suggesting to use the pullback as a buying opportunity.
• Most recent/highest conviction “buy-the-dip” call came last week (1/14/25) amid all major indexes testing supports (SPX, QQQ, DJI, IJH, VXF, IWM, ARKK, SMH), bullish breadth divergences, other ongoing bullish signals.
• Those dip buys are finally paying off, with all these indexes breaking out from 1+month consolidations. The SPX has gapped-up on four of past five trading days, indicating significant strength