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This Rout Ain't Over Yet.

And here is why.

Note that while the [SPXL] bull in this game had itself a steep nosedive last week, the bullish daily Moving Average configuration [green line below the red] didn't' even budge. This means that the market remains extremely overbought, even while selling off. So the easy way out for the market is to pull back till it finds some renewed traction at a lower level.

But let's recap what it is we're looking at here. The Moving Average lines configurations reflect the degree to which the market is overbought oversold or just runs normal. Of course, the relative extent of these configurations lies in the eyes of the beholder, and that's what makes a market.

Also note that the bull and bear benchmark indexes here are of the 3x leveraged kind. That keeps them closely triggered, and ready to turn on a dime.

The green line below the red line is bullish; above the red line it's bearish. The gap between these two lines is what the market reacts to. To the degree that the market can become overbought or oversold these gaps can morph into bubbles, which are always warning signals to market participants.

Currently and despite last week's sharp selling squalls the MA lines bubble in the bull's camp is still extremely overbought and has to deflate one way or the other for the rally to continue. Also note the double top of the SPXL index which can bring any rally to a dead stop, as has been the case here.

The RSI strength indicator has slipped into the bearish territory, and so have the MACD momentum signal bars hanging from the demarcation line. Not to be outdone, the MACD momentum index has slipped below its red signal line, all of which means that things are getting a bit dicey for the bulls.

But check out the weekly SPXL bull index and note that this thing is solid as a rock as it keeps geared to the upside, which reflects the primary direction of this market. Note that this index remains well supported by a normal and bullish MA lines configuration with the green line below the red, and no bubble in between.

So the weekly SPXL index is selling off a bit, but it had rallied too far too fast so that now some of the overbought fluff is blowing off, and that's bullish.

Just as on the daily chart the Moving Average configuration shows the bull to still be extremely overbought with the green line below the red line in an overblown bubble formation, so it is on the daily chart that this bear-index [SPXS] remains extremely oversold with the green line above the red, and also in a bubble formation.

What this implies is that as the bull comes down, the bear goes up. The question is to what degree is momentum behind these moves.

The MACD momentum index for the bear has moved above the red signal line while the MACD momentum signal bars are solid on top of the demarcation line. Both of these moves are supporting the bear's bias to the upside. The RSI strength indicator has moved into plus territory, which is also to the bear's advantage.

But check the weekly bear chart and note that the MA lines configuration [green line above the red] continues to be negative for the bear, especially since it keeps sloping along with the index from the upper left of this chart to the lower right.

With the MACD momentum signal bars totally flat-lined, there is no momentum for the bear in either direction, and that's why the RSI strength indicator keeps at the lower end of its bearish territory, which means that this bear is still pretty weak.

These conflicting signals by the daily vs. weekly bull and bear indexes imply that there will be more triple digit swings by the market in either direction. But as a whole and according to the daily bull and bear charts, this market is leaning to the side of the bears, at least for now.

As usual, this market-forecasting junk-bond canary [JNK] is right on the mark again. In the middle of last November while the market was rallying strongly, this little bird's momentum signal bars began sliding into bearish territory, soon to be followed by a bearish MA lines configuration [green line above the red line] and a steeply nose-diving index. The only saving grace for this bird is the bubble blowing at the bottom of the RSI channel, which could indicate that a snap-back rally is in the making.

But if that is all there is, watch out down below.

The Baltic freight index [BDI] and the commodity index [CRB] are joint at the hip and together give a pretty good accord of the global industrial activity out there, and right now it sure doesn't look good. Note that the MA lines configuration for the CRB [green line above the red] is quite bearish while it slopes with the index from the upper left to the lower right. Not to be outdone, the MACD momentum index along with its signal bars are deep in bearish territory.

The BDI shows the same bearish configurations, except that it has a RSI bubble forming. This could mean that the selloffs in the commodity market are way overdone, and that could trigger some snap-back rallies. But don't hold your breath.

The precious-yellow [GOLD] is firing up the cheering section. While this index has pulled up a bit too far too fast, its MA lines configuration is about to turn bullish as the red line is poised to rise above the green line. The RSI strength indicator is settling down in its bullish territory, and the MACD momentum index along with its momentum signal bars are doing the same.

If only the commodity market as a whole could give gold a little support. But it'll come.

Oil [WTIC] was a disaster case in the weeks past and will remain a disaster item in the weeks ahead. That's all that needs to be said here.

Although last week's selling squalls were typical for December when usually markets open strong, give some of it back and then welcome Santa with a rally.

But this time it may be different and last week's selloff could stick. As some market strategists see it, there has never been quite a combination of central-banks interaction in the global capital markets as there is now. It is this financial engineering that has kept this rally going, but now that the biggest and most active player of them all, the U.S. Fed, has stepped back, the market is getting jittery.

There are doubts in this game that the lesser central banks can keep the easy-money spigots open and if they can't, what will the impact be on the global financial markets?

Sure, the global economies are getting stronger, especially while benefiting from the steep nosedive in the price of oil and associated energy costs.

But some economists are beginning to believe that this drop in the price of oil may be caused by a lesser strength in the global economies than first thought. Let's hope not.

Meanwhile, keep these favoured ETFs on tap. They may come in handy.

The sectors: Consumer Discretionary [XLY], Financials [XLF], Health Care [XLV], Airlines [XAL] Biotech [BTK].

Leveraged Bull ETFs:

NASDAQ 3x (TXXX), Technology 3x (NYSEARCA:TECL), DOW 30, 3x (NYSEARCA:UDOW), Financials 2x (NYSEARCA:UYG), S&P 500, 3x (NYSEARCA:SPXL), Healthcare 3x (NYSEARCA:CURE), Health Care 2x (NYSEARCA:RXL), Financials 3x (NYSEARCA:FAS), NASDAQ 2x (NYSEARCA:QLD), Mid-Caps 2x(NYSEARCA:UMDD), Alerian 2x (NYSEARCA:MLPL), S&P 500, 2x (NYSEARCA:SPUU), Russell 2000, 3x (NYSEARCA:URTY), Semis 3x (NYSEARCA:SOXL), Biotech 2x (NASDAQ:BIB), Materials 2x (NYSEARCA:UYM), China 3x (NYSEARCA:YINN), Gold 2x (NYSEARCA:UGL), Silver 2x (NYSEARCA:AGQ), Gold Miner 3x (NYSEARCA:NUGT).

Non-Leveraged Long ETFs:

China (NYSEARCA:ASHR), Treasuries (NYSEARCA:EDV), Biotech (NYSEARCA:FBT), Health Care (NYSEARCA:RYH), Pharma (NYSEARCA:PJP), REIT (NYSEARCA:VNQ), Semis (NYSEARCA:SMH), Transports (NYSEARCA:XTN), Medical (NYSEARCA:IHI), Semis (NASDAQ:SOXX), REIT (NASDAQ:KBWY), NASDAQ (NASDAQ:QQQ), Consumer Discretionary (NYSEARCA:VCR), Consumer Staples (NYSEARCA:VDC), Consumer Services (NYSEARCA:IYC), Technology (NASDAQ:QTEC), Financials (NYSEARCA:VFH), Gold Miners (NYSEARCA:GDX), Jr. Gold Miners (NYSEARCA:GDXJ), Gold ETN (NYSEARCA:UBG), VIX Bull (NYSEARCA:UVXY).

Leveraged Bear ETFs:

Europe 2x (NYSEARCA:EPV), NASDAQ 3x (NASDAQ:SQQQ), Energy 3x (NYSEARCA:ERY), Oil 3x (NYSEARCA:DWT), Oil 2x (NYSEARCA:DTO), Oil&Gas 2x (NYSEARCA:DUG), Gold 3x (NASDAQ:DGLD), Gold Miners 3x (DUSTS), Russell 2000, 2x (NYSEARCA:TWM), Russell 2000 3x (NYSEARCA:SRTY), Small Caps 3x (NYSEARCA:TZA), S&P 500 3x (NYSEARCA:SPXU), Semis 3x (NYSEARCA:SOXS), S&P 500 2x (NYSEARCA:SDS), DOW 30, 3x (NYSEARCA:SDOW), Financials 3x (NYSEARCA:FAZ), Biotech 2x (NASDAQ:BIS).

Non-Leveraged Short ETFs: