Imagine Your Head As A Bowling Ball

---

Reasons to be cheerful; reasons to be fearful. Perhaps the whole outlook needs to shift from black or white to dare I say it-shades of gray?

Before I go any further, I must give a shout out to the equities market and its nonstop source of entertainment last week. One of my New Year resolutions was to stop intensely watching ticks all day, given I would like my head to continue to sit in alignment with the top of my spine (chiropractor having fun with me lately), instead of the vulture head/neck thing that happens when one sits in front of a computer day in and day out.

But I guess I and the market will keep my chiropractor’s (and probably a massage therapist’s) pockets well lined since with 200-300+ moves on a daily basis, I find little else as compelling or fun!

That is not to suggest we do not have simultaneously legitimate concerns and strengths to consider in the macro picture. Both the S&P 500 and NASDAQ could not close out the week above the 50 daily moving average nor the 10 DMA. That puts them both back in an unconfirmed warning phases (needs a second day to confirm.)

The Dow and Russell 2000s though, did hold in now confirmed bullish phases although both (all actually) closed down on the week. The long bonds roared and oil fell again. Add that up and you have what seems to be a mainly stock pickers market while the indices try to figure it out.

I wrote last week that we need to complete 10 full trading days in January to establish a significant calendar range, one we can most likely follow the break of one way or another thereafter. Until then, the “noise” waffles between soothing ocean waves and approaching tsunamis.

S&P 500 (SPY) Let’s talk slope. The 50 DMA is rising, the 10 DMA falling. The 50 DMA is more substantial than the 10. Overall, we are pretty much smack in the middle of the range between December high and January low. Short-term bias negative but intermediate and longer term bias still positive.

Russell 2000 (IWM) 117.10 the 50 DMA. What if we stay in a range between the December low and January high for a while? Should drive the analysts a bit batty-that would be even more fun.

Dow (DIA) 176.51 the 50 DMA and like the others, positive slope.

Nasdaq (QQQ) Friday’s low is important and so is 103.15 as a close range to watch

XLF (Financials) In the new year of stock picking thus far, fins are not where its at for longs

KRE (Regional Banks) An awful day on Friday

SMH (Semiconductors) Relative to the financial sector, semis remain a place to go for strength

IYT (Transportation) My guess is this will stay weak unless the market does something way more dramatic than swing 300 points a day in a range

IBB (Biotechnology) Held 310 that’s a good thing and still showing leadership

XRT (Retail) Possible double top at 97.15 and another sharp reversal down from there. Yet, still in a bullish phase. Another example of how mixed the sectors are right now making everything way harder to predict.

IYR (Real Estate) Held on as the leader with a new high close again

ITB (US Home Construction) Very strong although I might consider taking some profits after calling out this group all last week.

GLD (Gold Trust) New high close for 2015

GDX (Gold Miners) Same as GLD

USO (US Oil Fund) I was asked if this is bottoming. Not yet but will stay tuned

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs regained 130 making the huge volume perhaps not a blow off but warranted buying. Regardless, feel defensive therefore, part of the glass half empty feeling

UUP (Dollar Bull) Good volume and a sell off from the highs-no real concerns unless it breaks 24

FXI (China Large Cap Fund) Held 42.00 by the end of the week. Perhaps money going into China is a sign that US economy expectations for more growth has abated with room for this economy to catch up some