OVERVIEW: This was an incredible week, all markets once again rose in unison (for the most part). How many more times and for how much longer can this kind of activity continue? Stocks, Bonds, PM’s, U$D, Oil … did I forget anything? Oh yeah, Transports and R2k put in new highs! Amazing… A couple of little diddies I mentioned in updates from earlier in the year: We are in extraordinary times and while the majors did not go out with a bang, I suspect Sir Alan Greenspan will. I do not believe his majesty will let this market fall on the last minutes of his watch. He may very well pump the presses like never before, might even fry ‘em in the process. Shortly thereafter we saw an influx of $60B which led to a New Year rally and had me following up with this comment a couple of weeks back: We are not moving up on anything more than a liquidity pump. If you remember nothing else, remember this; what the Fed giveth, the Fed can taketh away. The Fed pump will most likely continue throughout January and if the market begins to sag, the Fed will probably goose it. How long that lasts and how deep the inkwells run are my queries. To make a long story short, I believe this is exactly what we are witnessing. I will be very interested in what the Program Trade data for this week reveals, unfortunately it will not be released until next week. I would not be surprised to see it over 60% and as I have mentioned in past updates about this being a sign of buying, not selling and orchestrated by the man. One can still look to Temp Open Market Operations (while they are available) as discussed here #msg-9451235 and see that Mr. Greenspend was a busy man. I imagine that this juggling act may continue for the unforeseeable future provided there are no “shocks” to the system. These so-called shocks could come from a variety of sources and much like our terrorism alert situation, all it takes is one significant incident to fall through the cracks and we could have a financial 9/11 on our hands. Having said that, I have to give credit where credit is due. The powers that be have held this thing together much longer than many (including myself) expected. It still does not erase the impending issues at hand, which someday will be painstakingly dealt with. Until then I say trade it, but tread cautiously…
The CoT data shows again that little has changed although a trend appears to be developing as open interest continues to trend higher and a positions in Commercial Short interest on the majors are still quite evident. Gold remains with Commercial Shorts lining up against Large Spec Longs and Oil has picked up a few Commercial Shorts. You can go here to view the CoT data graphs #msg-9171642 -- Equity Fund flows as detailed by AMG Data Services reported Equity funds (xETF’s) net cash inflows totaled $2.189B in the week ended January 25, with 64% (1.406B) going to Non-domestic funds. Exchange Traded Equity Funds reported net redemptions (-$6.455B) from all sectors but International and Utilities. The largest ETF Inflows were $690M to the Nasdaq-100 Index Tracking Stock fund and $284M to the Select Sector SPDRs Utility fund. The largest ETF Outflows were -$2.319B from the SPDR Trust Series I fund, -$1.526B from the Mid Cap SPDR fund and -$1.225B from the DIAMONDS fund. Money Market funds report net redemptions of -$7.635B. The full report can be viewed at #msg-9451760 and -- As for Oil, Gold and the U$D, we saw some weakness in Oil that was short lived to say the least as Oil finished out at near $67bbl ($66.68). Gold continues to flirt with the $560’s but ended the week just shy of that mark at $559 ($559.56). The U$D took a plunge to 87 in the beginning of the week and has had a strong move to close out above 89 (89.31). The CRB has proceeded to march in a stair step climb and closed the week just short of 347 (346.96). Treasury yields found a bottom and have been on the move higher with 2yrs@4.51%, 5yrs@4.45%, 10yrs@4.50%, 20yrs@4.75% and 30yrs@4.68% …
ECONOMIC #’s: Mixed data filled the slate, so what else is new?
Leading Economic Indicators (LEI) – Dec = 0.1% vs 0.9% Expected 0.2% #msg-9378958
Existing Home Sales – Dec = 6.60M vs 7.00M Expected 6.87M #msg-9409143
Let’s take a quick look at the Hamas parliamentary victory… The Palestinian election commission said Saturday that the final vote count showed Hamas winning 74 of 132 seats in the Legislative Council while Fatah won 45. Talk about scary, but what does it mean? I have heard talking heads say that an election does not prove anything, if so what does this say about the Iraqi elections? It seems to say that dipping ones finger into indelible ink has little meaning. Without going too deep into any of this, I just want to point out that when an outcome suits its suitor, it has meaning and when it doesn’t it doesn’t. I am in no way happy about this recent turn of events, but the timing could not have been more appropriate had it been planned that way, wouldn’t you say? Here we are in the midst of a standoff that could lead to a possible altercation with Iran who just so happens to be a supporter of Hamas, or so we are told. This turn of events is just another in a long line of coincidences, right? I am not so sure. Is it a coincidence that issues surrounding Iran have flooded the airwaves lately? Is it a coincidence that the Iranian Oil Bourse will be introduced in March and M3 data conveniently removed from the public domain? Is it a coincidence that we are suddenly in the process of reducing the size of American forces in Iraq? Yeah, that’s the ticket, just another coincidence. Just exactly how many more “coincidences” will it take before it is realized that there are no longer mere coincidences when it comes to politics or finance, just agendas…
Must read: Muckraker Report - The approaching war with Iran (Part II) #msg-9431694
Coincident Theorist?
WHAT CAN WE EXPECT NOW?: While I was looking for some more weakness last week, it should be of no surprise that this was not the case even in the face of a 1.1% GDP. I also had mentioned in the previous update that the New H/L’s did not jive with A/D and Up/Down Volume which gave me reason to pause and rethink that what we may be seeing is not what I might expect. The Fed pump is cranking and as stated in the Overview, will most likely continue right into the FOMC meeting on the 31st should any real selling materialize. This coming week most likely will see a lot of sideways chop and slop even though many speak in a matter of fact manner about rate hikes being over, one and done, etc. Maybe rate hikes will take a pause, however I doubt the Fed’s work is done. That same GDP report also showed inflationary pressures as seen via the Chain Deflator. So how B-2 Ben decides to handle this is something I do not think anyone really knows, but I tend to believe he will follow in his mentors footsteps. If rate hikes are concluded, then so be it. Just stay flexible and go with the flow, but take nothing these talking heads espouse for granted. At this point in time there are some extreme readings in multiple indicators, but it is difficult to put any credence in any of these at this time due to the influx of the not so invisible hand. Still of note is the EPC which dipped intensely below 4.0 and into the 3’s! Albeit a brief visit, but one for the books. Another interesting note is that bullish sentiment declined by nearly 4%. All I can say with certainty is be on guard and expect the unexpected, this is not your father’s stock market. I wish I could be more definitive in this week’s outlook, but these are some strange days indeed. As for the U$D, Gold and Oil, some interesting activity is in store. The U$D has been getting support into the upcoming Fed meeting, looking for a test of the 90 area. Gold (and more so Silver) look strong although I could see Gold weakening a little in here to $547-$550. Oil likely remains somewhat volatile, but I doubt we go below $62bbl anytime soon. As stated last week, any one of a plethora of events can change things overnight.
Technically Speaking, the week ended with Bullish Advisors are at 54.7% with Bearish Advisors at 25.3%. The VIX and VXN came off of their peaks to close at 12 & 17 respectively. The CBOE EPC Ratio ended the week at .59 and TPC ratio at .80. The RSI 5-Days are Neutral across the board. The P/C ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), 200DMA stocks and Bullish %'s all can be viewed below along with the major indices…
CORE: ENPIX, NXG, Swapped SRPIX for UJPIX, took position in PRGNX €uro & ¥en Currency with USPIX as my hedge against a crash
SPECULATIVE: DNDN
SCALP TRADE: Ran a 2-day in & out on RACK (sweet if I do say so myself 8^)
SWING: ABLE, GEOI dumped for a nice gain (jumped on GSX)
Disclaimer: This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and attempt to identify trends and create a track record. I am not a day trader and invest mostly in funds or baskets of stocks, perform occasional swing trades and some scalps. Data presented may not be 100% accurate as I do make mistakes, so please perform your own due diligence.
Market Data 
Markets 
AI
