Victory Has 1000 Fathers, But Defeat Is An Orphan

---

John F. Kennedy 35^th President of the US

We dined with some friends Thursday night who are both in real estate and have very little knowledge or actual interest in the stock market, although they are always a great barometer of our local real estate market.

As Keith and I were explaining our “double-edged sword” theory on low oil prices-everyone is happy about that-and the Russia, Eurozone woes, it dawned on me that 2 powerful perceptions, now becoming market reality, have prevailed.

First, the US economy. Seems that the “domination” over all other countries has become palpable but more importantly relatively impervious on any sustained level to troubles overseas.

Second, declining oil prices. What began as fear about deflation and the collapse of certain economies dependent upon oil has now switched to “We love cheap oil! Bring it!”

That of course, makes me wonder about what happens if the oil market bottoms (the US Oil Fund USO rallied over 5% on Friday with Oil Service Holders OIH and Oil and Gas Exploration XOP not too far behind.)

If the oil market is bottoming, we can presume low interest rates have something to do with that. We can also presume that, since Technical indicators precede fundamentals, an announcement from OPEC cutting production might come along.

Regardless, with the short week ahead and the incredible rally last week, doesn’t seem like anything can dampen the holiday spirit. The small caps are close to 2014 highs (120.97 made July 2nd) while SPY DIA and QQQs are close to the much more recent (also 2014) highs.

My eyes will be on oil and solar as both sectors are undervalued with solar in particular perhaps the next best play as we enter 2015. The best advice I can give you is if you want to have a diverse basket across several asset classes in your portfolio, this is one of the best opportunities I have seen to make that happen. The classic leaders for the last 2 years-Biotech, Real Estate, Technology and Semiconductors should be represented already. Social media is coming back after a long period down, oil, gas and solar stocks are worth looking at plus, there are great shorts out there as well. I will be completing my Phases and Forecast for 2015 very soon-an extensive (I love research and tend to fall down the information rabbit-hole easily) study of the near past and not so distant future with specific recommendations. If you are subscriber of any of our MG products, it will be yours for free.

USA, USA, USA!

S&P 500 (SPY) Doji Friday near the highs-seems like digestion-only concern would be a gap open lower that can’t recover. No way ahead of X-Mas!

Russell 2000 (IWM) Closed on new multi-month highs

Dow (DIA) Very similar comments to the ones on SPY

Nasdaq (QQQ) Unless this gaps below 103.25 and continues to fail from there, seems market wants higher

XLF (Financials) 24.45 key support if this is to continue

KRE (Regional Banks) About to have a Golden Cross

SMH (Semiconductors) Semis look a bit tired but that hasn’t meant much this year

IYT (Transportation) 162 major overhead resistance

IBB (Biotechnology) New highs as one would expect

XRT (Retail) Digested the new highs posted last Thursday.

IYR (Real Estate) Ended the week on new highs

ITB (US Home Construction) Amazing how well this held the 200 DMA on the correction and now, into resistance so must continue forging on

GDX (Gold Miners) Watch the 50 DMA for a phase change

USO (US Oil Fund) 22.54 is a good point to clear for more bottoming action if that is going to happen.

OIH (Oil Services) 35.50 great underlying support. 2 weeks ago it tested a channel on the weekly chart and then last week, closed above it-worth noting

XLE (Energy) Looks like OIH and maybe even better as it is closer to a potential phase change

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs not done yet it seems-watch rates carefully

UUP (Dollar Bull) New highs-USA USA!

EEM (Emerging Markets) Maybe the whole emerging world is bottoming

IFN (India Fund Inc.) Inside day over the 50 DMA-interesting