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Is This Market Losing Or Gaining Traction?

Last Friday, January 16 Wall Street bounded sharply to the upside on signs that the U.S. economy is on track for continued growth, led by consumer sentiment which is at an eleven-year high.

The prestigious "American Association of individual investors" reported that bullish sentiment rose sharply last week, despite the wild ride of the indexes. It shows that most market participants have a high level of confidence in the market, even though stocks generally are down on the year.

As the bulls have it, falling energy cost, a positive corporate earnings curve and sustained global economic growth assures that the market will continue to advance in the month ahead.

But even though pessimism and bearish sentiment are down for the 13th consecutive week, there are growing concerns that falling oil prices will have a negative impact on an already wobbly energy sector, which could have adverse ripple effects on the overall economy.

Add to this high stock evaluations, worries about the global economic expansion and a heavy dose of market volatility, all of which shows that the bears are not totally out of this game just yet.

Check this bullish percent index [BPS] and you could be excused for asking the question "where are the bulls?"

This index appears to be in a nosedive, its Moving Average configuration is turning bearish as the green MA line is inching above the red line and all while the MACD momentum signal bars remain solid in bearish territory. The only thing to the bulls' advantage is the strongly oversold bubble by the RSI strength indicator, which could trigger a bounce to the upside.

Note the [50R] portrait of this market's volatility factor, which is totally geared to the downside. The MA lines configuration is tuning bearish with the green line above the red, the RSI strength indicator remains stuck in its bearish territory and the MACD momentum bars are heading to the bearish south of the demarcation line.

Not a good omen for the bulls in this game.

Note that the [50R] portrait of this market's volatility factor is totally geared to the downside. The MA lines configuration is turning bearish with the green line above the red, the RSI strength indicator remains stuck in its bearish territory, and the MACD momentum bars are heading to the bearish south of the demarcation line. So watch it if you're a bull in this game.

Note that on this daily short-term bull chart [SPXL] the market still looks as if it is poised to slip lower. While the MA lines configuration of this index [green line/red line] remains totally neutral, the RSI strength indicator has a heck of a time getting out of the bearish territory it finds itself in.

Meanwhile, the MACD momentum signal bars are well ensconced within their bearish space, all of which points to weaker markets in the months ahead.

Yet, the weekly long-term bull index [SPXL] leaves no doubt that this six-year Bull Run has no intention to slow down and will continue to move from the lower left to the upper right. But to get from here to there are some negative obstacles to overcome.

The RSI strength indicator is sitting at dead-neutral and can slip either way, while the MACD momentum bars are indicating that downside momentum has gripped the market. These are caution signals that should not be ignored.

Note that the daily bear index [SPXS] reflects a bear that is trying to get out of the hole it has been hibernating in for the last six years but still has a tough time doing so. The MA lines configuration [green line above the red] is providing a negative environment for the bears, while the RSI strength indicator is still stuck in neutral.

But that the MACD momentum bars have managed to climb on top of the demarcation line is a sign that momentum is increasing on the bears' side.

One look at the weekly bear chart [SPXS] makes it clear that in the long-run [???] this index will keep on moving from the upper left of its chart to the lower right as it has been for the last six years. But in between the bear will find plenty of opportunities to take large chunks out of the bull.

NASDAQ [NDX] is having a tough time finding traction to the upside. Its MA lines configuration has turned bearish [green line above the red] the RSI strength indicator is sitting at dead-neutral and the MACD momentum signal bars keep hanging from the demarcation line into bearish territory. This doesn't look good for the bulls, especially in the technology sector.

There is nothing new about the general commodity sector [DBC.] This index has proven to be a dead loss for the past months, and will continue to be a dead loss in the months ahead.

This market forecasting junk-bond canary [JNK] can't make up its mind which way for the market in the months ahead. While this index keeps consolidating, the RSI strength indicator keeps sitting at dead-neutral and the MACD momentum bars keep above the demarcation line in bullish territory. Yet, the MA lines configuration [green line above the red] remains solidly bearish.

Flip a coin!

Gold is definitely finding some upside traction as it has since last December when its MA lines configuration started to turn bullish [green line below the red.] The gold index along with the MACD momentum bars is a bit overdoing it while reaching for higher highs, while the RSI strength indicator is definitely overbought. So a pullback in the price of gold is overdue, and that would be a bullish development for the yellow metal.

Oil [WTIC] is reflecting the general commodity market. Oil was a dead loss in the months past, and continues to be a dead loss in the months ahead.

Note that the MA lines configuration for WTIC remains extremely bearish with this wide gap between the green MA line above the red. The RSI strength indicator remains deep in its bearish territory, but surprisingly enough; the MACD momentum bars have started to on top of the demarcation line in bullish territory.

So maybe something bullish is happening out of this. Just don't hold your breath.

One of the most important forecasting tools for a market prognosticator is this [XLP: XLY] index. When it rises it reflects bearish tendencies in the market, but when it declines it is bullish.

Right now the market has got issues to content with. Note that every aspect of this index is bullish, meaning bearish for the market.

This index keeps soaring to a high degree of bearishness, the MA lines configuration [green line sliding below the red] is turning bullish for the bears and the RSI strength indicator has reached the top of its channel, all of which is bearish for the market.

But most of all, that the MACD momentum bars are rising strongly into bearish territory on top of the demarcation line are all warning signals that the market is at a tipping point to a sharp selloff.

Now, when it comes to the market nothing is written in stone. So hopefully this XLP: XLY bearish omen will have faded before doing too much damage to the long side of the market.

In case the market comes your way, here are some favored ETFs to consider.

ETF sectors:

Healthcare, Financials, Discretionary, Materials;

Leveraged Bull ETFs:

Mid-Caps 3x (MWJ), Healthcare 3x (NYSEARCA:CURE), Semis 3x (NYSEARCA:SOXL), NASDAQ 3x (NASDAQ:TQQQ), Biotech 2x (NASDAQ:BIB), Financials 3x (NYSEARCA:FAS), DOW 30, 3x (NYSEARCA:UDOW), Alerian 2x (NYSEARCA:MLPL), Mid-Caps 3x (NYSEARCA:MIDU), S&P 500, 2x (NYSEARCA:UPRO), Jr. Gold Miners 3x (NYSEARCA:JNUG), Small Caps 3x (NYSEARCA:TNA), Materials 2x (NYSEARCA:UYM);

Non-Leveraged Long ETFs:

Jr. Gold Miners (NYSEARCA:GDXJ), Biotech (NYSEARCA:BBH), Discretionary (NYSEARCA:VCR), Technology (NYSEARCA:XLK), Semis (NASDAQ:SOXX), Financials (NYSEARCA:IYF), Russell 2000 (NYSEARCA:IWN), NASDAQ (NASDAQ:QQQ), Transports (NYSEARCA:XTN), S&P 500 (NYSEARCA:IVW), Gold Miners (NYSEARCA:GDX);

Leveraged Bear ETFs:

Russell 2000, 2x (NYSEARCA:SKK), Mid-Caps 3x (NYSE:MYY), Semis 3x (NYSEARCA:SOXS), OIL 2x (NYSEARCA:SCO), Technology 3x (NYSEARCA:TECS), Small-Caps 3x (NYSEARCA:TZA), Energy 2x (NYSEARCA:DUG), Financials 3x (NYSEARCA:FAZ), Materials2x (SMN), NASDAQ 2x (QID), Nat-Gas 2x (NYSEARCA:KOLD), DOW 30, 2x (NYSE:DXD), Biotech 2x (NASDAQ:BIS);

Non-Leveraged Short ETFs:

Mid-Caps (MYY), Materials (NYSEARCA:SBM), Financials (SEF), Russell 200 (NYSEARCA:RWM), DOW 30 (NYSE:DOG), Oil (NYSEARCA:SZO), S&P 500 (NYSEARCA:SH), Small-Caps (NYSEARCA:SBB), Equity Bear (NYSEARCA:HDGE);

GOOD LUCK!