Last week Monday the market rallied triple digits as a sudden risk-on mood drove the bulls into action. But because there was no real conviction behind this rally the market turned tail and took a triple digit nosedive during last Friday's session. Now market participants are back on the sidelines with a wait-and-see kind of attitude.
Ever since last April the market has been searching for direction but after some sharp ups and downs has essentially gone nowhere. Apparently it is the renewed strength in the U.S. dollar and a corresponding decline in the price of oil that's putting the kibosh on any rally attempt. Add to this the market's concern that the U.K. is set to pull out of the European Union and the adverse ramifications that could have for the global economies, it is no wonder that the market is getting a bit jittery. But still, this market remains poised to the upside.
Note that the daily benchmark index [SPX] shot up too far too fast and therefore has to pull back a bit and consolidate. But for as long as Moving-Average lines configuration stays bullish with the red line above the green line, so is the market staying bullish.
The DOW [INDU] shows that the market has been consolidating since it took a nosedive last month. But for as long as the red MA line stays below the green MA line the market will have a tough time rallying from here.
The weekly benchmark [RSP] chart suggests as well that the market has rallied too far too fast during the past two weeks and needs to pull back to consolidate. But again, with the red MA line above the green, this market remains in a bullish mode.
NASDAQ [NDX] rallied strongly after consolidating last month, only to take a nosedive last Friday. But now that the red and green MA lines have merged, NASDAQ is at the verge of snapping either way.
The commodity market has been consolidating and continues to be well supported by a sharply bullish MA lines configuration with a wide gap between the red line above the green.
This implies that the commodity market is overbought, top-heavy and needs to pull back to find renewed traction to the upside.
The junk-bond canary is forecasting bullish market action ahead. This should remain the case for as long as the red MA line stays above the green.
The cyclical sector of the market [PEZ] will continue its bearish mode for as long as the red MA line remains below the green.
The bullish percent index [BPS] will also remain bearish for as long as the red MA line hangs below the green.
The 50R index continues to reflect a bearish breadth in the market which will stay in place for as long as the red MA line stays below the green. This is another sign that the market is headed for lower lows.
With these bearish signals all over the market the bulls [SPXL] in this game remain remarcably resilient. Even though this index is topping out, for as long as the red MA line stays above the green, the bull will remain in control of the market.
For a while last month it appeared that the bears [SPXS] finally were able to grab a hold of the market and move this index to the upside. But with the red MA line staying below the green, the bears' attempt to rally was doomed.
For as long as there is a gap between the red line below the green on this SPXS chart, the bears will have a tough time to claw this market down.
But with the bulls apparently unable to make much headway either, the market will most likely keep chucking along sideways to nowhere.
The yellow metal [GOLD] had itself a nice little rally while being well supported by the bullish MACD momentum bars and a bullish RSI strength indicator.
But if the MA lines configuration stays bearish with the red line below the green, gold's rally won't hold.
While oil [WTIC] is consolidating it is also well supported by a bullish MA lines configuration with the red line above the green.
The problem here is that the gap between these two lines is growing wider which implies that oil has become overbought, top-heavy and therefore ready for a pullback.
With all these cross-currents in this market it is still best to wait and see when a better entry point emerges. But just in case, here are some favored ETFs to keep on tap.
Energy, Health Care, Materials, Biotech, Financials;
Leveraged Bull ETFs:
Non-Leveraged Long ETFs:
Leveraged Bear ETFs:
Emerging Markets 2x (NYSE:EEV), Russell 2000, 2x (NYSEARCA:TWM), NASDAQ 2x (QID), S&P 500,2x (NYSEARCA:SDS), Financials 2x (NYSEARCA:SKF), Small Caps 3x , DOW 2x (NYSE:DXD), Commodity 2x (NYSEARCA:DEE);
Non-Leveraged Short ETFs:
NASDAQ (NYSEARCA:PSQ), Emerging Markets (NYSEARCA:EUM), Russell 2000 (NYSEARCA:RWM), DOW (NYSE:DOG), Total Market (NYSEARCA:TOTS), Base Metals (NYSEARCA:BOS), Commodity (NYSEARCA:DDP), S&P 500, (NYSEARCA:SH), NASDAQ ;
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