It looks like we are starting out the new year with a bit of indecision in the markets. As it stands now the swing point that was put in on 12/29 is a lower high in the NASDAQ. For real damage to the uptrend the market would have to take out the low from 12/16 which is also the $100 support level. Resumption would more likely take place when price can get above $105. Until either of those scenarios plays out I think we are in a neutral environment. The Russell was the leader for the run from 12/17 to 12/29 and I still think it has great upside potential from a weekly chart. The $118 level that I was watching for so long is back in focus again. Strongest scenario is holding it along with the gap up from 12/18. Overall neutral though until a clear direction is presented.
That about sums it up for the indices. Simply put no real damage has occurred yet, best case scenario is IWM starts to lead the market higher again. For now patience is key, which is even harder for some just coming off what was basically a two week vacation. Come back to work to be patient. That's just what the market is serving up right now and our job is to roll with it, not force anything, and wait for what we need to see.
The watch list this week is very short for reasons I mentioned above. I like having the wind at my back when getting into positions which is something we don't have yet. The fact that the market is signaling patience right now isn't necessarily a bad thing though since performance benchmarks just reset. This neutral period will give some time for stocks to decide where they are going to be trading for the time being, in positive or negative territory and give a little direction.
I hear a lot of people saying this is just a calendar change, it means nothing, etc. and they are right to a degree. The trend doesn't change because the year ends, but what does change is the benchmark that massive institutions and hedge funds are following to track their performance for the year. A fresh start for relative and absolute performance and their money makes a difference. I follow the big picture to catch the big picture moves. Thanks for reading
-Michael
