Update: Week Ending February 8, 2014

 |  Includes: DIA, QQQ, SPY
by: Nasser Khraishi

As far as the week is concerned, the consolidation seems to be over. In reality my short and medium term oscillators bottomed during the week (Monday and Wednesday respectively), earlier than the Friday labor report. Both bottomed around the level of the September-October time-frame. We have anticipated that the market will be primed one way or the other prior to the Friday numbers, and it did. It seems the market reaction on Friday was that whatever price drop that was achieved earlier during the week was more than warranted by the actual labor numbers. In particular, the ISM numbers on Monday were significantly lower than expected, but all other numbers during the week seem to have some silver lining in them, including the "bad" labor report that showed the unemployment rate at 6.6% - slightly less than expected.

As far the DJIA, S&P 500, and NASDAQ Composite charts, again it was only the DJIA that showed a full-fledged consolidation, deep enough to show on the weekly charts. The other two had varying depth on the weekly charts, with the Composite effectively hardly registering a blimp on the weekly charts. Even then, this was a welcome breather, as things could not have continued at the pace that prices were accelerating at. The coming week does have some decent economic data to look forward to, but the most significant - - in my opinion - will be the FOMC minutes on the week after.

As for trading set action, as expected, it was the retail sector, including Disney (NYSE:DIS), The Gap Inc. (NYSE:GPS), and Nordstrom Inc. (NYSE:JWN) that was most active. As for Abercrombie & Fitch (NYSE:ANF), the action was outside numbers and earnings as it was in the form of the continued clipping of the wings of the CEO. AT&T (NYSE:T) fired a significant salvo in a new price war, and this affected the stock prices of the whole telecom group. This might have quelled any attempt at recovery of this sector.

Other than retail, the recovery in industrials and railroad is starting to show. Treasury rates dropped but there were signs of stabilization towards the end. This again played well for mREITs in particular and Annaly (NYSE:NLY), which is in my trading set, in particular. The repeated reminder here is that, given the Fed's stated goal of a 2% inflation, a rise in treasury rates still seems inevitable in the mid- to long-term. In any case, Gold (NYSEARCA:GLD)'s benefited overall of the weekly action.

My regular table for the indices follows.

Index/ETF Symbol and Name Daily 3-EMA-7 Weekly 3-EMA-7 Perceived Trend
SPX S&P 500 Index Down Up Neutral
DJIA Dow Jones Industrial Average Down Up Negative
COMP NASDAQ Composite Index Down Up Neutral
GLD SPDR Gold Trust ETF Up Down Positive
VIX CBOE Volatility Index Up Up Neutral
FVX CBOE 5 Year Treasury Note Yield Index Down Up Negative
TNX CBOE 10 Year Treasury Note Yield Index Down Neutral Negative
TYX CBOE 30 Year Treasury Bond Yield Index Down Neutral Neutral
Click to enlarge

As usual, the reminder is that the movement of the treasury yields is negatively correlated with the price of the underlying instrument.

As for my trading set, my short term "Perceived Trend Oscillator" stood at a "neutral" value of -3% on Friday. The lowest value was a clear "oversold" of -78% on Monday - similar to the lowest reading in mid-October. This is in contrast of the "sold" reading of -40% in the previous week. This improvement, unlike last week, was shared by the mid-term indication of the "Daily 3-EMA-7″ column in the table below.

As such, I am assuming that this round of consolidation is over!

The full trading set table is as follows.

Symbol and Company Name Daily 3-EMA-7 Weekly 3-EMA-7 Perceived Trend Is a Current Holding?
GERN Geron Corporation Down Up Negative Yes
JPM JPMorgan Chase & Co. Down Up Neutral Yes
GS The Goldman Sachs Group, Inc. Down Neutral Negative
WFC Wells Fargo & Co. Down Up Negative
NLY Annaly Capital Management, Inc. Up Down Positive
MO Altria Group, Inc. Down Neutral Negative Yes
T AT&T Inc. Down Down Negative Yes
VZ Verizon Communications Inc. Down Down Negative Yes
GPS The Gap, Inc. Up Neutral Positive Yes
ANF Abercrombie and Fitch Co. Neutral Down Negative
JWN Nordstrom, Inc. Down Neutral Neutral Yes
TGT Target Corporation Down Down Negative Yes
DIS The Walt Disney Company Up UP Positive
MCD McDonald's Corp. Neutral Down Positive Yes
MDLZ Mondelez International, Inc. Down Neutral Negative
BA The Boeing Company Down Up Negative
LMT Lockheed Martin Corporation Up Up Positive
CAT Caterpillar Inc. Up Up Positive
DE Deere & Company Down Up Neutral Yes
EMR Emerson Electric Co. Down Neutral Negative Yes
DOW Dow Chemical Co. Up Up Positive
ADM Archer, Daniels, Midland, Co. Down Neutral Neutral
MON Monsanto, Co. Down Up Neutral
POT Potash Corp. of Saskatchewan Inc. Neutral Neutral Positive
PFE Pfizer Inc. Up Up Positive Yes
BMY Bristol-Myers Squibb Company Down Up Negative
ABC AmerisourceBergen Corporation Down Up Negative Yes
AAPL Apple, Inc. Down Neutral Neutral Yes
INTC Intel Corporation Down Up Negative Yes
CSCO Cisco Systems, Inc. Up Neutral Positive Yes
HPQ Hewlett-Packard Company Neutral Up Positive Yes
CVX Chevron Corporation Down Down Negative
BP BP plc Down Up Neutral
NGG National Grid plc Neutral Up Positive
NI NiSource, Inc. Up Up Neutral
WMB Williams Companies, Inc. Up Up Positive
WM Waste Management, Inc. Down Neutral Positive Yes
CNW Con-way Inc. Down Down Negative Yes
CSX CSX Corp. Down Up Neutral
NSC Norfolk Southern Corp. Up Up Positive Yes
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Disclosure: It is important that you understand and agree that all information provided in this newsletter rely on publicly available data and tools with no guarantees of quality or suitability for any purpose, and that I can be long or short in any of my trading-set equities, at any time, with or without regard to indicated trends and described analytics, and that I do not give buy or sell or any other financial recommendations, and that any and all actions based on this commentary are solely the responsibility of the reader.