Market radar for 12 21 2011
The Quacera Commodity Early Warning system continues to reflect negative momentum in the long commodity ETFs. In the Currency EW, the Chinese Yuan (CB) is weakening. The short Japanese Yen (YCS) is gaining positive momentum. Intel (INTC) momentum is waning in the Dow Component report. The Dow Jones Industrials continue in a Bear Market pattern. The Utility SPD (XLU) is the strongest of the set, with a positive primary trend, investors are searching for income. The Consumer Discretionary (XLY) primary trend turned negative Nov 17th, a week before the heralded "Black Friday": pay more attention to this chart. We have made, since the October S&P low of 1074, 3 tries at crossing back above the 200 day SMA. Each attempt has ended lower than the previous one but the lows from those moves have not gone below 1158. This week’s big Tuesday rally took us to 1241 and then paused for breath as Christmas got closer. Much of the positive trading comes as a result of happy news from political theaters but selling resumes when the market detects lack of political will. Fundamentally, it is likely inevitable that Europe tries to print its way to prosperity but the memories of the failures of that folly are preventing it from happening. We expect that resolution will eventually come but it is always the when that calls for caution. We see this short term-ism remaining the norm for markets until one side or the other either wins or loses the will to go on.