- The most important message this week was the improvement in breadth over and above what was reflected in the major index price action.
- Short Term indicators did pivot back higher which takes away one caution for now.
- Longer Trend remains strong and actually improving on most measures.
- No signs of breadth deterioration that usually accompany major topping patterns.
- A little more strength from defensive sectors this week, but may turn out to be new year rotation into last year’s weakness in Real Estate, Utilities and Health Care.
- AD Line showed more volatility this week, but not enough to cause any concern. Some even improved overall for the week.
- McClellan Indicators continue to be a great tell and sign the strength is still underneath this market.
- Real Estate made a near term breakout this week trying to forge a bottom.
- Health Care looks like it could be in the early innings when looking long term.
What We are Watching:
- Small caps continue to perform well and still have some tailwinds. I think they can remain out front near term. $IWM $IWO
- Growth is pulling away from value. $IWO $QQQ $IWP
- Sector concentration should lean toward Growth and Cyclical sectors with the addition of Health Care, which I believe is going through a game changing shift. $IAI $IYJ $XLK $FDN $SMH $ITA $IYT $IYF
- Health Care, while not really a cyclical sector, I believe is going through a game changing shift that will drive it in a growth phase for a long time to come. $IYH $IBB $IHE $IHI $PSCH
- Real Estate while still near the bottom of the RS Rankings is breaking out bases on some ETFs $IYR $MORT $ROOF $VNQ
Thanks for taking the time to review this report. I am looking for a visual reference point for this summary. Some type of RPM gauges would fit perfectly…let me think on it for a bit. If there are any other improvements I can make, I would love to hear them. Please email me at email@example.com and please include your Stocktwits or Twitter handle.
Good luck this week. It 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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