The market is continuing to be led by the small caps in the Russell 2000 as well as the energy sector. I've seen so much talk about how energy is topping out because of Iraq, you would think they eventually learn.. Maybe taking profits as it pokes it's head above $100 (XLE that is) isn't a bad idea but shorting is just asking for losses and begging for recognition that you "called the top". In other news, gold and oil (the two commodities I am fundamentally bullish on, simply because of the fed) are really getting some action to the upside. Oil has been looking great for over a year now and I think it is finally starting to make a real breakout. Gold has been basing for over a year now and it is making an attempt (and nothing else) to get an uptrend going which I think could become explosive over time. In fact, silver is really looking technically good more so than gold for now. They will be traded just like anything else.
Trend following can be a boring process. Not much has changed since last week except the trend has further asserted itself. I am still using the Russell as the anchor setup to guide the rest of the market because it is holding up the best, maybe that changes during the week but for now nothing has changed. The 15 minute trend reversed early Monday and is still in motion right now so that is what I will be watching in the Russell. $120 is the next resistance level.
As for the individual stock setups, there are still plenty of them out there. The only difference I have noticed is that we have gone from nearly all of them playing out to less of them playing out but still a good amount.
Quick word about the bonds. Like I said last week, this rally has been supported on a 130m trend. The chart to the left is the 130m trend and it has turned down. Sellers are still able to hold price down enough to turn this trend downward. Until this turns back up (above $113 for now) I will not be participating to the upside. If it does get enough support to head higher again, then this will be the daily trend asserting itself again. If not, $110 will be the support I am watching for.
Sectors I am looking at this week for fresh entry points and emerging trends will be the materials (XLB), financials (XLF), healthcare (XLV), and industrials (XLI). That's about all I got for this week, glad to help anyone if needed. Once again thanks for reading.
Trade well,
-Michael
