Last Friday, the DOW was down triple digits in the red during early trade, only to run up triple digits in the black by the close. So much for the supposedly calmer markets.
Wall Street had slipped in previous sessions when it appeared that the members at the Fed couldn't't agree on a plan for when and by how much or if at all they ought to raise interest rates. After all, that's the key for the economy and the market's direction in the months or even years ahead. It appears that the Fed members are inclined to keep rates lower longer. As they see it, the economy is still fragile and that means the Fed hasn't got much lee-way to take a chance on raising rates.
Also, market participants were wondering what adverse impact the ongoing Greek debt-fiasco will have on the market going forward. But now, getting a four-month break due to the Greek loan extension beyond the February 28 deadline, investors can again concentrate on the Fed, interest rates and the effect the upcoming Euro-QE might have on the markets next month.
The global markets appear to be on a solid footing as they follow Wall Street up to higher highs in response to an improving global economy.
So all in all and after surviving some wild swings during its consolidation period from late December to last week's Thursday, the market appears to have broken out during last Friday's trade and seems to be in pretty good shape for the shape it's in.
Check this benchmark [SPX] chart which is as bullish as bullish can get. The only concern is this index which keeps soaring too high too fast and shows signs of "irrational exuberance." A pullback here and a bit of consolidating would be much appreciated by some market participants.
The RSI strength indicator is solid in its bullish territory, the MACD momentum signal bars are demonstrating strength on top of the demarcation line, and the Moving-Average lines configuration has turned decidedly bullish with the green line below the red.
When you check this weekly [SPXL] bull-chart, you'll notice that this long-term [?] bull-run continues unabated as it has for the last six years, or so. Sure, it had a few hiccups over the last couple of months, but only enough to bring this bull back to some solid traction.
During that time the MACD momentum bars showed fading upside momentum, but are now becoming positive again. The RSI strength indicator remains solid in its bullish territory, all of which has the bull set to resume its charge to higher highs.
It appears that this bear [SPXS] has gone back into hibernation again and keeps digging a deeper hole at the bottom of a deep pit. The MA lines configuration is totally bearish with the green line above the red, the RSI strength indicator appears to be stuck deep in its bearish territory and ditto for the MACD momentum bars. All in all, a gloomy picture for the bears in this game.
Check this [EFA] chart and note that this index has an exposure to a broad range of companies in the markets of Europe, Australia, Asia and the Far East. Just like Wall-Street, these markets seem to be afflicted by an over-exuberance that is driving related indexes into nose-bleed territories.
The large gap between the green below the red line of its MA configuration shows that the EFA markets are top-heavy, overbought and ready to keel over. The RSI strength indicator is close to blowing bubbles and the MACD momentum bars are sharply bullish on top of the demarcation line. So, while the EFA needs to pull back a bit and consolidate, the oversees markets in this circle are ready for take-off, and just waiting for this consolidation to get it over with.
The market forecasting junk-bond canary [JNK] just doesn't want to quit overdoing it. It's components are way up there in nosebleed territory, which means that the bleeding of the market could start at anytime, and that would be a good thing.
It would set the indexes down at a level where the market could catch its breadth and get ready to rally some more toward higher highs. But for now, notice that the MACD momentum bars of this JNK index have been fading and that makes any rally at this time suspect.
The anti-fear index [XIV] is flexing its muscles in this market and the only thing still "iffy" for this bull-run to shift into higher gear is this index's bearish MA lines configuration [green line above the red] which has turned into a caution signal for this market.
The NASDAQ market [NDX] also appears to be overbought and ready for a pullback. While this index has shot up too far too fast, its RSI strength indicator is ready to enter bubble-territory, and the MACD momentum bars show "irrational exuberance" on top of the demarcation line.
Surprisingly enough, the MA lines configuration [green line below the red] has it just right, bullish enough for a continued rally, but not too bullish to spark a serious selloff.
Although the commodity market [CRB] is trying hard to lift off the bottom, but as long as MA lines configuration remains bearish, [green line above the red] it will have a tough time doing so.
But while its RSI strength indicator is sitting at dead neutral, the MACD momentum bars are exceedingly bullish on top of the demarcation line.
This could indicate that the CRB is taking the first step to a sustainable rally.
After being irrationally bullish last month and blowing this fat MA lines bubble [large gap between the green line below the red,] the yellow metal [GOLD] has since deflated and could go into a consolidation mode. But with its RSI strength indicator and MACD momentum index so extremely bearish, more downside for gold has to be expected.
But for a long as the MA lines configuration remains bullish with the green line staying below the red line, gold will have a chance to rally again.
One of the reasons that the price of gold came under such intense selling pressure was the steep rally in the greenback [UUP] last month. But this month the U.S. dollar has been consolidating while being strongly supported by its MA lines configuration. The large gap between the green line below the red indicates that the greenback has been overbought, and is poised for a pullback. This is why the MACD momentum bars have faded deep into bearish territory and the RSI remains mainly neutral.
The price of oil [WTIC] remains under pressure by its bearish MA lines configuration [green line above the red.] But for as long as its MACD momentum bars remain bullish and stay above the demarcation line, oil will have a chance to keep building a base. That the RSI strength indicator is remaining neutral, gives oil an opportunity to consolidate and build an upside bias. But for now it's still a mixed bag.
All in all, it appears that the bulls have the wind at their backs and free sailing along the way.
So here are some favored ETFs to sail along with.
Leveraged Bull ETFs:
India 3x (NYSEARCA:INDL), Healthcare 3x ((NYSEARCA:CURE), Technology 3x (NYSEARCA:TECL), NASDAQ 3x (NASDAQ:TQQQ), Semis 3x (NYSEARCA:SOXL), Biotech 2x (NASDAQ:BIB), Semis 2x (NYSEARCA:USD), Real Estate 3x (NYSEARCA:DRN), Financials 3x (NYSEARCA:FAS), S&P 500 3x (NYSEARCA:UPRO), NASDAQ 2x (NYSEARCA:QLD), DOW 30, 3x (NYSEARCA:UDOW); Mid-Caps 3x (NYSEARCA:MIDU);
Non-Leveraged Long ETFs:
Biotech (NYSEARCA:XBI), Technology (NYSEARCA:IYW), Info-Tech (NYSEARCA:VGT), China (NYSEARCA:FXI), Discretionary (XKY), Semis (NYSEARCA:SMH). NASDAQ (NASDAQ:QQQ), Transports (NYSEARCA:XTN), Health-Care (NYSEARCA:XLV), Japan (NYSEARCA:HEWJ), Semis (SMH), NASDAQ (NASDAQ:QTEC), MSCI (NYSEARCA:EFA), Alerian (NYSEARCA:AMU), Mid-Caps (NYSEARCA:IWP);
Leveraged Bear ETFs:
Oil 3x (DWTI), NASDAQ 2x (NASDAQ:BIS), Financials 3x (NYSEARCA:FAZ), Oil&Gas 2x (NYSEARCA:DUG), Energy 3x (NYSEARCA:ERY), Emerging Markets 3x (NYSEARCA:EDZ), Materials 2x (NYSEARCA:SMN), Nat-Gas 2x (NYSEARCA:KOLD), Mid Caps 2x (NYSEARCA:MZZ), DOW 30, 2x (NYSEARCA:DXD), S&P 500, 2x (NYSEARCA:SDS), Russell 2000, 2x (NYSEARCA:SRTY), Semis 3x (NYSEARCA:SOXS), Mid-Caps 3x (NYSEARCA:MIDZ);
Non-Leveraged Short ETFs:
Emerging Markets (NYSEARCA:EUM), Russell 2000 (NYSEARCA:RWM), Active Bear (NYSEARCA:HDGE), DOW 30, (NYSEARCA:DOG), S&P 500 (NYSEARCA:SH), NASDAQ (NYSEARCA:PSQ), Oil (NYSEARCA:DNO), Mid-Caps (NYSEARCA:MYY), Oil & Gas (NYSEARCA:DDG);