Summary: Markets are at a critical juncture, as both the Nasdaq and S&P really need to hold current levels and we would like to see how the markets handle the January calendar range next week.

Risk On

• In the modern family, Semiconductors, while closing in a warning phase, are still holding up remarkably well on a relative basis.  (+)
• Bitcoin, a speculative currency, is holding up relatively well amidst the market turmoil. (+)

Neutral

• The New high new low ratio is still bouncing off its lowest levels though looking a bit more negative in the S&P than the Nasdaq with more of a neutral reading. (=)
• The risk gauges remain a weak neutral. (=)

Risk-Off

• With the shortened week, markets sold off with the QQQ and S&P having their lowest close post-election and all indexes in a warning phase. Markets are down -0.6% and -1.95% and down YTD. (-)
• Volume patterns are negative in 3 out of the 4 indexes with six distribution days in the Nasdaq 100 over the last 2 weeks. (-)
• Eight of the fourteen sectors were down on the week. Price pressure still remains with transports, energy, materials, metals all up on the week. (-)
• Energy costs are rising led by natural gas which is bucking its seasonal trend. (-)
• After looking a bit better, market internals for the Nasdaq and S&P, like the McClellan Oscillator, rolled over, confirming the negative market action. (-)
• The color charts (percentage of stocks above key moving averages) remain negatively sloped across all 4 indexes and timeframes. (-)
• Growth closed in a warning phase and now value is starting to lead growth on a short-term basis, though both are trending down, pointing towards risk-off. (-)
• Foreign equities continue to deteriorate and underperform U.S. equities and are either in bear or distribution phases. Weakness in foreign equities is confirmed by weakness in the Euro and Yen. (-)
• Gold and Oil exploded to the upside, which could be indicating a combination of geopolitical stress and inflationary pressures, creating pressure on interest rates. (-)
• With the strength in employment and inflationary pressures showing up, it's not surprising that rates rose again hitting their highest levels in over a year on the long-end of the yield curve and the yield curve continues to steepen. (-)
• Sentiment readings showing risk-off as the VIX moved up sharpley in alignment with the negative market action. (-)