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Is This Market In Gear Yet?

Wall Street ended the week lower last Friday despite an improving employment sector and strong jobs market. Check this benchmark [SPX] chart and note that even though a strong snap-back rally kicked in by the end of June, there hasn't been any decent momentum behind this move.

Sure, the Moving-Average lines configuration remains sharply bullish with this wide gap between the red line above the green line. But this bullish gap also means that this market is overbought, topheavy and in need of some retrenching before it can rally further.

Note that the RSI strength indicator remains strongly bullish above its neutral line. But when you check the MACD momentum bars you'll note that they have been in bearish territory since early August, and no rally can succeed for as long as that remains the case.

In fact, any rally while these bars are below the demarcation line is a rally to be sold.

Check the weekly benchmark [RSP] and note the double down-side spikes [bottoms] of last January and February. Even if it's only one spike down, it is enough to alert you to possible back to back rallies in the weeks ahead.

The problem here is that the market has been overdoing it. The RSP has spiked up too far too fast and is developing a nosebleed.

The MA lines configuration has formed too large a gap between the red line above the green, which means that this rally is overbought, topheavy and ready to keel over.

The RSI strength indicator is extremely bullish at the upper end of its trading range where the oxygen is getting pretty thin, while the MACD momentum bars remain solidly bullish above the demarcation line.

What all of this suggests is that in the short-term [whatever that means] the market remains wobbly and not sure of its footing.

But any rally after this probable pullback and consolidation will have staying power.

The cyclical sector of the market [PEZ] had itself a pretty good rally since last June, but is now poised for a pullback. While the RSI strength indicator remains quite bullish, the MA lines configuration has become overbought with too large a gap between the red line above the green.

Also, the MACD momentum bars remain neutral along the demarcation line. All of this means that there is no momentum behind this market, up or down.

Since early July NASDAQ [NDX] has rallied too high too fast and has now hit the ceiling. The RSI strength indicator has reached overbought territory, and the MA lines configuration reflects an extremely overbought index with this wide gap between the red line above the green.

This is making NASDAQ too hot to handle on the long side and could be the reason why in spite of its strong rally the MACD momentum bars are slipping into bearish territory beneath the demarcation line.

The commodity market [GTX] also had a strong rally since early August. The RSI strength indicator is solidly bullish above the neutral line and ditto for the MACD momentum bars above the demarcation line.

But the large gap between the red MA line below the green shows that the internals of this commodity market are still shaky and that the selling squalls in this index aren't over yet.

The rallies in the small-caps [SML] and mid-caps [IJH] sections of the market have also hit the ceiling, even though the RSI strength indicators and MA lines configurations remain solidly bullish.

But note that since the beginning of August these two mainstay indexes have totally lost their upside momentum while the MACD momentum bars are slipping below the demarcation line.

But if that's enough to take the market down, is anyone's guess.

The bulls in this game [SPXL] remained quite bullish last week with the RSI strength indicator solid in bullish territory above the neutral line. But with the MA lines configuration [red line above the green] showing too much of an overbought gap while the MACD momentum bars keep slipping below the demarcation line, the bulls appear to be losing their snort.

Every component of this bear-chart [SPXS] remains sharply bearish so that there is still no danger that the bear can do any harm to the bull. But the bulls show signs of goring themselves, and the ensuing selling squalls can be quite severe.

The spearhead of the technology sector [SOXX] has rallied too far too fast. This has caused sharply overbought conditions for this sector with this wide gap between the red line above the green while the RSI strength indicator keeps hitting the overbought ceiling of its trading channel also.

Yet, the MACD momentum bars are at dead neutral along the demarcation line. This is one more warning that the market is rallying on nothing more but the fumes of an empty gas tank.

Oil [WTIC] and Energy [XLE] have become extremely overbought, top-heavy and are vulnerable to keeling over.

Although the yellow metal [GOLD] appears to be mainly bullish, for as long as the MACD momentum bars keep below the demarcation line, gold's bias remains geared to the downside.

Every component of Wall Street's fear index [VIX] is bearish. This suggests that there is no fear in this game, and that makes traders nervous.

Although market's behavior has turned a bit "iffy" lately, here are some favored ETFs in case this game turns to your advantage.

ETF sectors:

Discretionary, Industrials, Materials, Semis;

Leveraged Bull ETFs:

NASDAQ 2x (NYSEARCA:QLD), Materials 2x (NYSEARCA:UYM), Small Caps 3x (NYSEARCA:TNA), Mid-Caps 3x (NYSEARCA:MIDU), DOW 2x (NYSEARCA:DDM), S&P 500, 2x (LLSP), Tech 3x (NYSEARCA:TECL), Semis 3x (NYSEARCA:SOXL);

Non-Leveraged Long ETFs:

Financials (NYSEARCA:IYG), NASDAQ (NASDAQ:QQQ), Semis (NYSEARCA:XSD), Mid-Caps (TWS) Small-Caps (NYSEARCA:RZV), S&P 5000 (NYSEARCA:IVW), Russell 2000 (NYSEARCA:IWO);

Leveraged Bear ETFs:

Gold Miners 2x (NYSEARCA:SDS), NASDAQ 2x , Mid-Caps 3x (NYSEARCA:MIDZ), Energy 3x (NYSEARCA:ERY), Commodity 2x (NYSEARCA:DEE), DOW 3x (NYSEARCA:SDOW);

Non-Leveraged Short ETFs:

DOW (NYSEARCA:DOG), Materials (NYSEARCA:SBM), Financials (NYSEARCA:SEF), Oil&Gas (NYSEARCA:DDG), Mid-Caps (NYSEARCA:MYY), NASDAQ (NYSEARCA:PSQ), Emerging Markets (NYSEARCA:EUM);

Check my Home-Page for more ETF and market info, and

"GOOD-LUCK!"