You can quote me on this because I am quoting Mike Burk, who is quoting FX Evolution Max:

Max on FX Evolution pointed out that last Thursday’s rally brought the SPY (SPX equivalent), on which millions of option contracts are traded, up to the point of “Max Pain” t- he point at which most option buyers lose the most money.

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Technical Market Report For March 18, 2023

Saturday, March 18, 2023 9:40 AM EDT

New lows are at bear market levels and the secondaries are leading the way downward.

The Russell 2000 (R2K) is leading the way downward.

Except for last Tuesday when there were 99 new lows on the NYSE, new lows were well into triple digits, every day, on both the NYSE and Nasdaq.

 

https://www.bloomber...watch#xj4y7vzkg

This could be real important going forward, as with such a massive weight in just 2 stocks, which also happen to be the 2 largest market cap stocks in the USA....

IF...things starts to turn south, selling could lead to even more selling....

The departures will shrink tech’s weight in the S&P 500, while also making the remaining companies in the industry index more influential. Apple and Microsoft together already account for 46% of the S&P 500 Information Technology Index, and that share will go up when Visa and Mastercard are removed: The credit-card companies are the fourth- and fifth-biggest components, respectively, of the tech benchmark, accounting for 6.8%.

The increased weighting of Apple and Microsoft means investors who are benchmarked against the tech index will have an incentive to own even more of those two stocks to keep up with the index, but that also would heighten the effect if the shares start underperforming the market.

Still, Apple and Microsoft stand alone in their influence. The two are the largest stocks in the overall market, representing 13.1% of the S&P 500. Over the past 10 years, the pair’s average combined weight was 8%. This means the rest of tech, regardless of individual corporate fundamentals, are likely to suffer if this strength reverses.

“If you have an environment where two companies that are a huge part of an index are performing differently than the rest, that’s a terribly difficult environment to operate in,” said Denny Fish, who manages tech sector funds at Janus Henderson.

And Famous last word here:

However, he stressed that the growing influence of tech wasn’t inherently a risk.

The 3/15/23 AAII readings are as follows: Bulls 19.2 Neutral 32.4 Bears 48.4. Most of the

time the AAII readings don't give a signal one way or the other. However, these current

readings bring the AAII stuff up on my radar screen to be watched more closely, A ST

bottom signal typically occurs when the Bull reading is at 20 or below while at the same

time the Bear reading is at 50 or above. These current readings are close to giving a ST

bottom signal but aren't quite there yet.. 

According to my risk summation system, the days over the next week or so with the highest risk of a turn in or acceleration of the current trend in the DJIA are Monday March 20th, Wednesday the 22nd and Monday March 27th.  The risk windows pattern does suggest that the Wednesday the 22nd risk window might possibly drag out into early Thursday morning.

Last week the Monday risk window was a dud when its low was broken, but the Wednesday risk window may have tagged an important low depending on action this coming week.

The latest crash risk window closes this coming Wednesday March 22nd.  I believe that the next one doesn't show its ugly face until sometime this fall.

This past week the Fed made a Faustian bargain with latter day Mephistopheles aka bankers.  Like in  Goethe's tale, this little deal with the devil at the crossroads of finance too will almost certainly end in tragedy, only the timing is in question.  QE on steroids was used to shore up the banking system which basically wiped out half of the balance sheet reduction achieved so far.   The Fed needs to come clean this coming week in the presser and just admit upfront that their inflation fight will always take a backseat to any banking, stock market, unemployment, etc., etc. crisis that might arise.  The money hose will be directed full flow onto any flaming situation instead of the just smouldering inflation.

Regards,

Douglas

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