State of the Markets

This weekend market update holds an extensive review of the weekly and daily status of TrendXplorer in the various markets.

The weekly SPX painted a bullish cross on the 10 and 40 SMA's, on the daily chart the equivalents of the 50 and 200 SMA's a cross is very close, but did not happen (yet?). During the last 10 years every bullish cross was followed by a prolonged period of rising prices. Only in Spring 2002, the bullish cross was soon followed by a bearish one. At that time however the 200 SMA was firmly downsloping, while right now it is fairly flat with some positive bias. Notice on the daily, momentum is waning somewhat and unlike the $DJI, SPX did not take out its July tops.

The Dow did take out its July 2011 double top and the high of this week is only some 34 points under the May 2, 2011 top.

The NDX did take out its high of last July and had follow through during this market week. Notice the steep rise during this last month. What goes up fast goes down fast? The weekly and daily charts show quite some negative divergence.

The picture for the Russell2000 is not very different from SPX, though the small caps show some lagging performance in attacking its July and May 2011 tops.

Banks did follow the rise in the broader indices too, but some heavy distribution seemed to be going on last week, followed by a drop the the daily 200 SMA which acted as support with price bouncing up on Friday.

After making a new all time high on the first trading day of 2012 consumer staples did make a double top during Januari 2012. It happened on waning momentum and with some firm negative divergence with the May 2011 top. Last week consumer discretionary (XLY) followed suit in setting its all time high on last Thursday (chart not shown).

Treasury Bonds as reflected in TLT went sideways for weeks on stretch, finding support on the daily 50 SMA. During the week before last, price crossed below resulting in a sell signal on Monday last. The sell did not trigger though (extreme point = low did not break) and was canceled on Friday.

This week GLD went ballistic by jumping of its 200 daily SMA. TrendXplorer still has GLD on neutral, as it should to prevent whipsawing. The build in inertia works just like a flywheel.
Notice the cross of the weekly 30 SMA (150 daily SMA) on GLD that supported the uptrend since January 2009.

With the anticipated upmove in SLV by the positive divergence that confirmed in the first weeks of 2012, the sell signal went off, allowing to jump on the SilverExpress. As SLV is spurting towards its 200 daily SMA, momentum is still supportive for the upmove.

After making a higher on double negative divergence, the US Dollar (UUP) is dropping like a brick, cutting through its averages like a razor blade. No signs of nearby support. Of course its mirror, FXE, is racing for the surface like a radio buoy released from a submarine (chart not shown).

To conclude this market update a look at oil. USO closed the week right on the daily 50 SMA. TrendXplorer is neutral on oil. But with the falling dollar, one is tempted to think oil going to new highs.

Have a great trading week!