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Monday Market Movement – Not Up For A Change

|Includes: SPDR Gold Trust ETF (GLD), SPY, USO

SPY DAILYThis is frustrating isn't it?

The S&P fell to 1,355 in the Futures, breaking our rule to get bullish as they must hold 1,360 for 2 consecutive days so we're back to watching and waiting now as it's been two full weeks of teasing this line as the index creeps back into the bottom of David Fry's SPY channel.

We thought we were going to fail back at 1,300 but we caught a nice bounce off the bottom at the beginning of the month and flew up another 5.5% since then but now we're almost 10% over the 200 dma on less and less volume and that's one hell of an air pocket below us on the S&P so of course the lack of more free money from the G20 is going to hurt today - the question is - how much?

We discussed the G20 over the weekend, so no need to re-hash it here. Let's take a little time today to delve into the logic of S&P 1,360 and see if we can find some good reasons for it to stick. In his letter to shareholders this weekend, Warren Buffett very plainly says that his entire bullish premise is based on his believe that housing will make a comeback. Jim Bianco had an article on that this weekend noting Homebuilder Optimism has risen for 5 straight months, back to the highest level since May of 2007, at the early stages of the slowdown BUT - let's keep in mind that the sentiment level is 29 and anything below 50 is still NEGATIVE - so we have a long way to go!

XRT WEEKLYWe have been playing XRT short, expecting it to have been rejected at $56, like it was last summer prior to a 20% drop. Now XRT is at $58, up 31% from it's October lows and we have to wonder if the situation for Retail has REALLY gotten 31% better than high-volume investors were pricing it AFTER seeing last July's earnings reports or is this another major air bubble that's about to burst?

The January Retail Sales Reportshowed $361Bn in sales and that was up 5.6% from last year's $342Bn. This month we'll see an automatic 3.5% bump as February has an extra day (people fall for that one every 4 years) and we have strong…

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Tags: GLD, Iran, retail sales, speculation, SPY, trickle down economics, USO

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Disclosure: I am short USO, GLD.

Additional disclosure: Positions as indicated but subject to change.