Jobless claims disappointed the market, but they wouldn’t hold back the Dow Jones Industrial Average from gaining 90 points on the session. Also on the negative economic news front Markit Preliminary PMI for the US printed lower than the expected 52.5 reading at 51.1. Any weak number has all but guaranteed we’ll get at least another year of full bore Quantitative Easing. Earnings season continues to push stocks in wildly different directions. It is amazing the moves we see throughout earnings season. Financials lagged the market once again while semi-conductors hung on for dear life. The star of the session was the Russell 2000 leading all major market averages. We remain in an uptrend and we simply do not have enough evidence (price) to say otherwise. Stick with the trend.
Gold and silver are in very similar patterns and have been out of favor with investors for pretty much the entire year. Of course you get the gold bugs who cry the destruction of the currency. However, from a price perspective and a longer-term view both ETFs look poised to move higher. Keep an eye on them. Shorter-term speaking it does appear crude oil has found support, but remains in a long-term downtrend. CLF reports after the bell and it will be interesting how the stock reacts to its earning release. IAG which lacks accumulation is another name to be on the look out for. Miners may be back and we’ll be looking for price confirmation.
Moving from miners to sentiment we are seeing quite a few bears leave the market. Bulls are dominating sentiment, but aren’t at ultra extremes. However, they are a bit high and with the lack of bears hanging around creates a conundrum for Bulls. How long do the stay in? The II and AAII sentiment survey show Bulls above 50% and bears under 20%. Bear levels are a bit extreme being sub 20% while Bulls aren’t near the 60% market yet. This can mean plenty of different things, but we are seeing a wide margin between the two. While we aren’t at extreme frothy levels it does serve notice we must obey our price signals. Uncertainty is all around us and our rules is what keeps us away from falling victim to uncertainty.
Adding fuel to the fire in terms of what is to come. You have these charts to remind you there is an impending top and you have to sell now! What if we go higher from here? What is your plan? You need a plan despite what these charts may show you.
Are we topping?
Have a great weekend!
