20131227 Strength In Numbers Executive Summary
for the full report see here
Total Market:
- Breadth expanded nicely this week negating many divergences and solidifying support for the market’s move.
- Short term indicators have flipped and are now near highs, but no extremes yet. volatility likely to increase while it resolves. These are notorious for divergences
- May to present still looks like a rotational or “running” correction has been playing out; if so this leg will be larger than most predict.
- No signs of breadth deterioration that usually accompany major topping patterns. Uptrend remains on solid footing.
Broad Sectors:
- Sector structure is optimal for strong markets with cyclical sectors continuing to lead and show strong breadth while doing it..
- Consumer Discretionary, Consumer Staples, Financials, Health Care and Technology saw AD Lines all in new highs this week. which is a huge chunk of the overall market capitalization.
- McClellan Summation Indexes are sending an important message with all sectors crossing and moving higher this week.
- Basic Materials is the Sector Highlight as it made a nice move after last week’s mention
What We are Watching:
- Continued barbell effect with Large Cap Growth and Small Caps in general outperforming. $QQQ $DIA $IWN $IWM
- $DIA can surprise if we have new leg up with traditional names you know perking up everywhere.
- Sector concentration should stay with Technology, Industrials, Financials and Consumers until the show any signs of weakness. If economy is stronger than most think, these areas will continue to surprise. $XLK $IYC $IYK $IYJ $XLF
- Basic Materials is a top pick for 2014 with Industrial Metals getting a head start. Sector ETF RS Rankings is worth a look here with $XME $PKB $FXZ $RTM in the top slots.
Thanks for taking the time to review this report. If there are improvements I can make, I would love to hear them.
Good Luck this week. Luck is there for the making!
G. Thomas Lackey Jr, CMT CFP
Follow me on StockTwits and Twitter @gtlackey
(All market data above are derived from Stockcharts.com, Esignal, and Reuters Datalink)
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