February 2022 Market Update: Bear Volatile Market Type and System Quality Number® Report (Abbreviated) By, R.J. Hixson

This week as we offer you a very abbreviated market assessment.

We will return on April 6th with a full Market Update, System Quality Number® Report and commentary.

The S&P has been declining over the last two months or so. As you can tell from the S&P 500 weekly bar chart below, the growing weekly price bar bodies and wicks tell of increasing volatility.

The second chart shows Van’s Market SQN Score which has been flirting with Bear territory for the last four weeks. It was back in Bear as of the close on February 28.

This third chart shows that volatility is clearly in Van’s range for a Volatile market type.

Van’s market type methodology is not predictive; however, it does offer clues to the next possible market types. His market type usually changes by one degree so keeping the directional component stable (Bear), then volatility would more likely move to a Normal or Very Volatile level. If we were to keep the Volatile level constant, then the direction would likely move into either Sideways or Strong Bear. Decreasing volatility probably favors moving to Sideways. Very Volatile types have the highest correlation with Strong Bear.

Van would tell you to keep an eye on volatility and be prepared to shift trading systems with a shift in market type.

Index Scorecard

USD Index Daily Chart

System Quality Number® Report

The US Dollar is strong while Van’s World Market Model this month looks overwhelmingly brown and red indicating broad weakness.

The commodities section is the only area of the tables showing more green than anything else. Commodity-related symbols dominate the strongest ETF list. Municipal and interest-related funds occupy most of the spots on the weakest list. Big money seems to be moving out of “paper” and into “stuff”.

The summary table below shows the weakness of the overall database with nearly 70% of issues in bear territory.

We will return on April 6th, 2022 with a full Market Update, System Quality Number® Report and commentary.

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