January 5, 2014 Executive Summary
Total Market:
- Not much changed on the short holiday week. Breadth did come in a bit on the broad level with the market weakness (as expected).
- Short term indicators did come off the high some, but are just starting to form potential divergences. Breadth Thrust Indicator only of slight concern.
- 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.
- AD Line showed more volatility this week, but not enough to cause any concern. Some even improved overall for the week.
- McClellan Summation Indexes are still suggesting the moves can have room to expand higher.
- Basic Materials was last week’s Sector Highlight and it continued to improve this week with Precious Metals making a notable move. More to come in 2014.
- Real Estate is discussed as a potential bottoming pattern starting here in this week’s Sector drill down.
What We are Watching:
- The Barbell affect worked last week on a relative strength basis, but at this point, Small Caps seem better positioned into January, but overall both ends look strong. $QQQ $DIA $IWN $IWM
- Longer term still think $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 they show any signs of weakness. Financials look great here. $XLF $IAI $IAK $XLK $IYK $IYJ
- Basic Materials are still in the early stages, so look close at its ETF RS Rankings.
- Real Estate to see if it can continue to solidify the bottom it is trying to put in. ETF RS Rankings as well as Individual RS Ranking lists are a good place to start. $IYR $MORT $ROOF $VNQ
Thanks for taking the time to review this report. If there are improvements I can make, I would love to hear them. Please email me at gtlackey@gmail.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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