Market Summary

The weekly candle in the image below is a Hammer candlestick when it is at a bottom and it is called a Hanging Man when it is at a top. In either case it is a call for patience as we wait for the next candle to get confirmation as to direction. To my eye sentiment is bullish in all time frames and the daily chart appears to be forming a Bullish Flag with consolidation and range bound movement in anticipation of a resumption of the trend. Click on image to enlarge.

For the week there was little change in most of the markets. On the upside FXI was up 1.43% but not enough to lift the EEM. Click on table to enlarge.

Market Summary Update

I have changed the parameters on my Market Summary SPY indicator to better reflect what I am seeing in the market. The weekly panel found support on the 30 week moving average as seen in the image below which I changed from the 20 period. According to this setting there was never a Long-term sentiment change to bearish sentiment. The other panels I have changed to the 50 period moving average from the 20 period. The red line indicates where the market gapped higher and should be seen as an area of critical support that if broken indicates a resumption in the correction. Currently all time frames remain bullish. Click on image to enlarge.

Market Summary

The correction appears to be over and sentiment has changed to bullish on all time frames. As can been seen on the weekly panel on the image below there was a weekly gap on the real bodies of the two most recent green weekly candles. The market is above its 50 day moving average and the next target is the prior 115.14 high of January 14, 2010. A breakout above that would be very bullish. Click on image to enlarge.

It was a wonderful week for the markets which were up nearly across the board. For the week gasoline as tracked by the UGA was up most at 7.05% followed by the oil ETF USO up 6.28%. Only UNG and FXI were in the red. Of note is last Friday's release of the CPI and PPI (Consumer and Producer Price Index) which was lower than expected indicating low inflation and low pressure on the Fed to raise interest rates. The $US dollar had gapped up higher on Friday and reversed course closing at the low of the day. If the dollar declines here it will give the stock market a chance to rally. Click on table to enlarge.

Market Summary

While Short-term Sentiment as indicated by the background color on the image below has turned bullish, Long and Intermediate-term Sentiment remains bearish. We have come off of a long extended rally with a high on 1/14/10 of 115.14 and a recent bearish correction of approximately 10%. The question is whether the correction is over or is there more downside to this market. Since all bear markets begin as a correction a little caution is appropriate here. Click on image to enlarge.

For the week only the $US dollar tracking ETF UUP and the natural gas ETF UNG were down with all the other indexes in the green. Of note in the YTD column only the UUP is up 3.10% while all the other indexes are in the red. The stock market goes in the opposite direction to the $US dollar and as the dollar rallies the stock market declines. With the concern over Portugal, Italy, Ireland, Greece and Spain (PIIGS) credit rating the Euro has declined resulting in the rise of the $US dollar. How this all plays out we will just have to wait and see. Click on table to enlarge.

Bulls are back

Short-term Sentiment has turn bullish although just barely. The market has come off of very oversold levels and this is a bounce but the question is will the momentum to the upside continue? The next level to the upside is the 109 area and we will just have to wait and see if we get there. Click on image to enlarge.

I have watched how the China ETF FXI and the Emerging Market ETF EEM have been leading the markets. China has just broke a Falling Wedge Pattern which is usually bullish after having made a correction to back below the 200 day moving average. I expect this ETF to rally and the SPY to be pulled along with it. Click on image to enlarge.

Market Summary

Continued selling caused the Long-Term (Weekly) Sentiment to turn bearish on January 28 when the SPY closed below 109. Last Friday's low of 104.58 takes price back to where it was on November 4, 2009 and down 10.59 points (or 9.17%) from the January 14 high of 115.14. Friday's candlestick formed a hammer pattern which often signifies a short term bottom. We may get a rally in the market for a few days however the trend has clearly become more bearish. Click on image to enlarge.

For the week the natural gas ETF UNG did the best up 7.41% followed by the $US dollar ETF UUP up 0.85% and all other indexes for the week were in the red. For year-to-date (YTD) the Oil Sector Index is up the most up 11.62% followed by the $US dollar ETF UUP up 3.18% and again all other indexes are in the red. The YTD loser is the China index FXI down -12.91%. Click on table to enlarge.