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.