Weekly view of SPY, GLD, and UUP

The SPY continues to go higher on the weekly chart with no sign of letting up. Long term sentiment remains bullish. Click on image to enlarge.

A top in the GLD can be seen to have been put in the last week of November on this weekly chart. Note the Doji-Shooting Star candlestick pattern that marked the top. Click on image to enlarge.


I use the UUP as a proxi for the US Dollar. The weekly UUP chart shown here made a tweezers bottom the last two weeks of November. Click on image to enlarge.

Market Summary

It may be possible that the lows we see here are the lows from which the market makes its rally forward but I don't think so. Still we have been going sideways for more than 5 weeks and most likely have a band of support keeping the market up. I have made a line on the weekly chart portion of the image below which is approximately the lows of the candles on the hourly portion of the image. Short and intermediate term sentiments are still bearish. Click on image to enlarge.

From the list of tracked indexes the natural gas ETF UNG made the biggest gains for the week up 10.97%. The China ETF FXI was down the most off -4.77%. Click on table to enlarge.

Market Summary

What is going on with this market? We have had five gap days in this market in as many weeks according to my count around this 110-111 level in the SPY. We had a sentiment change from bullish to bearish back to bullish again. Can we really be bullish now? I have heard reports 4th Quarter GDP estimates have been raised to 4% and that certainly would be bullish. However, we have all the warning signs to consider. Click on image to enlarge.

What are the warning signs? If we look at the chart below of the S&P 500 we will notice that we are currently at about the same level as we were at the top of the market in mid October yet we did make a new high in November and again in December. Other markets, however, did not make new highs in November and December. Various asset classes have been topping out and going lower even while the S&P 500 made new highs. Could this recent high at 1119.13 on the S&P 500 on 12/04 be the high for the year? Click on image to enlarge.

As can be seen the US Dollar has broke above the 50 day moving average and held for several days. Let us not forget that the bottom in the stock market in March was accompanied by a top in the dollar and that there is an inverse relationship between the two. Click on image to enlarge.

Markets that have topped include the housing market index $HGX on 9/17. The XLF index with a high on 10/14. The $CRB index topped on 10/21. Oil topped on 10/21 and currently closed below $70 per barrel. The EURO topped on 11/25. And the GLD gold index made a high on 12/3 at 119.54 but has fallen off sharply since then. For the week the UNG Natural Gas ETF which was very oversold was up 10.76%. Other markets were flat or in the red. Click on image to enlarge.

Down we go

Short and Intermediate term sentiment has turned bearish. Note the gap lower marked by the blue oval. The US Dollar has firmly held above its 50 day moving average. This could be a good place to go short the market with a tight stop. Click on image to enlarge.

Market Summary

Climbing a wall of worry, that is what bull markets do. Bull markets are defined by the trend of the longer weekly and monthly time frames. A wall of worry is defined by the trend, or lack of a clearly defined trend, in the shorter hourly and 4-hour time frames. We are clearly in a bull market having this last week made an outside key reversal to the upside when compared to the prior week's candlestick on the weekly chart. Only the very short term hourly chart is displaying a pink background and this is what I call the wall of worry. The 240 Minute chart is my short term chart and it is clearly still in the bullish camp. Click on image to enlarge.

China's FXI was once again the most bullish for the week up 5.15% followed by the Russell Small Cap index at 4.43%, and the Emerging Market EEM at 4.26%, all very impressive. Clearly the leaders in this cyclical bull market are continuing to lead. The biggest loser by far was the Natural Gas ETF UNG down -12.11% for the week and the most down YTD at -65.18%. Friday's better than expected Non-Farm Payroll (NFP) employment report gave the US Dollar reason to rally which it did getting above its 50 day moving average for the first time since last April and with a corresponding drop in the price of oil and gold. The US Dollar is key to this market and if we see some follow through next week on the dollar to the upside I expect to see the stock market roll over and move south. Gold was down Friday -$45.20 to close at $1162.40per ounce. The GLD gapped lower Friday leaving a two day Island top. Interest rates gapped up higher on Thursday on the 10 Year Treasury Note $TNX and continued higher Friday. Next week is critical for many of these markets and we will continue to watch these numbers closely. Click on table to enlarge.

The Bulls have it

I have noticed a cycle for the last several months in which the market begins a rally at the beginning of the month, peaks about 3 weeks later around the time of options expiration, and then decline for the last few days of the month and then repeats. December is off to a good start with short-term sentiment back to bullish as prices gaped up higher once again causing the background color on the right side of the image below to turn green and leaving a two day Island Bottom on the chart. Click on image to enlarge.