We were sitting at brunch on Sunday with our cell phones firmly planted in our coat pockets since eye contact and intimate conversation are so readily replaced by texting and tweetingon our cell phones.
That got me thinking about the warp speed in which information travels these days. I began to envision the planets orbiting around the sun. If you can imagine the sun as the market, planets as information, the planets themselves as people, and then think about the speed of their orbits around the sun traveling at warp speed 9.97 (at warp speed 10, humans devolve back to salamanders), the doppelgänger of a complete cycle or one full day goes from 24 hours to about 5 seconds.
Now, apply that to the impact social media has on the markets. Nearly everyone has access to instant information, with virtually zero barrier to entry on who provides that information. Information exchange (true or false) then travels fast enough to make Mr. Spock’s head spin. Enter, reaction.
How then, can any economist or analyst make a logical prediction on economic cycles and their long term impact when these cycles now (at least from a behavioral standpoint) happen in minutes rather than months or even years?
Segway to the S&P 500. We begin the week confirming a weak warning phase. However, with all the bearish forecasts, SPY is only down a little over 3% from the highs. The smallcaps (Russell 2000) remains in a bullish phase. I noted last week the slopes on the 50 daily moving average are positive. Overall, daily volume is running just about average. The negative cycle of the last 2 trading days brought the bears out of hibernation. Yet, given the speed of current cycles anything positive could easily send them right back to their dens. If the behavioral perception changes for pretty much any reason (hard to predict what) put on your suntan lotion and prepare for a sunny day.
S&P 500 (SPY) If takes out 204.70 that will put life back in the market. Otherwise, see 200.50 next support Subscribers: Negative pivots in all
Russell 2000 (IWM) Still in a range between the December low and January high. And held onto the 50 DMA.
Dow (DIA) 176.65 is the 50 DMA and on Friday it was 176.51-that is a slope going up!
Nasdaq (QQQ) 100.66, then 102 then 103.24 are the 3 main points
XLF (Financials) Into support so it has anything left needs to run up from here
SMH (Semiconductors) Relative to the financial sector, semis remain a place to go for strength, especially if can clear 53.80
IBB (Biotechnology) Held 310 that’s a good thing and still showing leadership
XRT (Retail) Possible double top at 97.15. Yet, still in a bullish phase.
IYR (Real Estate) Held on as the leader with a new high close again
ITB (US Home Construction) Still strong
GLD (Gold Trust) December high here 118.99 close by and if clears good to the 200 DMA at least
GDX (Gold Miners) Took out the December high the 200 DMA is at 22.86
USO (US Oil Fund) $1.57 at the pumps in Santa Fe
XLE (Energy) Still defending the 2014 low
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs new high close-that is not helping the market confidence
UUP (Dollar Bull) No real concerns unless it breaks 24
