Greetings stock fans. US equities markets traded with a slight negative bias in last week’s trade despite in-line releases in CPI; Industrial Production and Capacity Utilization, as well as better than expected results out of both Intel (INTC) and JP Morgan (JPM), all of which were unable to fester both investors and traders spirits as the averages cooled and closed with fractional losses.

 

 

As a result of last week’s action and the ‘slow drip’, we continue to find many more potential favorable set-up’s than short set-up’s, although our proprietary ratio has now slipped from last week’s explosive  reading of 15.5:1 (certainly garnered our attention and perhaps provides us with some ‘pause’,,,1-9) to its present 8.5:1 reading. Despite the dip in ratio, the tape continues to display a favorable demeanor and as we’ve been noting, this tape remains in a favorable posture and should continue to receive the benefit of doubt until or unless proven otherwise.

 

 

Moving on to the markets, despite some decent economic data, as well as positive earnings reports, the major indices were unable to respond in favor as the COMP led the path lower with declines of 1.2% for the week, with both the S&P 500 and DJIA posting fractional losses, yet the trend remaining intact as the Spoo’s hover above their moving averages as evidenced in the chart below:

 

 

 

 

 

 

As one can observe from the chart above, the Spoo’s continue to demonstrate a positive bias with the index resting above its 20-Day moving average and perched well above both its rising 50 and 200-Day moving averages, suggestive of the trend.

 

 

While both relative strength and MACD have declined in the past week to neutral readings, such should not have come as a surprise as we directed readers attention in last week’s letter when we referenced, “While we have yet to ‘sprint/explode’ to new highs in favor of the ‘grind’, readers should be aware that we find ourselves fast approaching short-term overbought conditions (RSI 70) from a relative strength point of view, where the tape may find some pause after a bit more upside.” Additionally, we went on to say, “Nevertheless, should the tape find the footing ‘sticky’ in the days ahead and perhaps experience some consolidation/pullback, both technical conditions, as well as our proprietary ratio remain positive and continue to suggest that this tape remains ‘innocent’ until or unless proven otherwise” , which continues to prevail, thus far.

 

 

Moving forward, the tape found weekly congestion at the SPX 1148-50 zone where the footing was indeed ‘sticky’, as well as short-term slightly overbought conditions. Thus, ‘potential’ headwinds/resistance reside in the aforementioned zone, while SPX 1130 and more importantly, the 1110 level and its 50-Day moving average, lend potential support in the days/weeks ahead.

 

 

 

 

After three consecutive weeks of ‘green’ across the board, global equities markets/bourses put in a benign week of trade where prices fluctuated within a narrow range, yet the bias remaining positive as the Shanghai Composite; Jakarta Composite; KLSE Composite; Singapore Straits; Seoul Composite and Taiwan Weighted all posted mild gains for the week, while the Nikkei finished at new 52-week highs. Although the Hang Seng and BSE 30 finished flat to slightly lower, the region continues to display favorable characteristics and trade at the upper end of their ranges. As for ‘Down Under’, both the All Ordinaries and NZ 50 pared recent gains to finish slightly lower for the week, yet both remain in a technically sound posture. Moving on to Europe, the CAC; DAX and FTSE fell prey to profit taking as all three finished a shade of crimson, yet like their global counterparts, continue to display a favorable trend. In summary, while last week’s
action was a bit mixed, trade remains constructive!

 

 

 

 

With equities under modest selling pressure in last week’s trade, ‘Treasury Land’ was the beneficiary of such exodus as cash flowed into treasuries with the 10-Yr yield sliding 15bps to finish at 3.67% and closing below its 20-Day moving average. After flirting at the upper end of the range (4%) in past weeks, the ‘Note’ appears to be in ‘pull-back’ mode as it continues to consolidate its recent push into higher territory. Moving forward, the 3.5%-3.6% zone, as well as its 200-Day moving average (3.45%) should lend short-term support, while the 4% and 4.2% figures continue to represent multi-month ‘hurdle/resistance’. Nevertheless, we remain within our longstanding 3.2%-4% ‘home on the range’.

 

 

 

 

The metals put in a constructive week of trade where both Gold and Silver trended in sideways fashion and in tight range, yet ultimately succumbed to slightly lower levels as the ‘yellow metal’ posted fractional losses of less than 1% closing out at $1130, while ‘Hi-Ho Silver’ shed .09 to end at $18.39. As we navigate the landscape ahead, we’ll reiterate our words of last week when we stated, “both metals were able to ‘re-capture’ their 20 and 50-Day moving averages, which from a technical viewpoint, is encouraging. Nevertheless, both Gold and Silver remain in consolidation mode and while further upside is certainly possible in the days/weeks ahead and cannot be discounted, we’re not quite ready to pronounce, “New Highs”  around the corner, just yet, as we suspect both the ‘yellow metal’ and ‘Hi-Ho Silver’ have additional work before the next leg higher
ensues”. Additionally, “In the meantime, Gold finds ‘potential’ resistance in the $1140-50 zone and perhaps more significantly at the $1175 figure, while $1100-20, as well as the $1050-75 range should lend support in the days/weeks ahead. As for Silver, both the $18.50-75 level, as well as the $19.50 figure ‘may’ pose as headwinds/resistance, while the $17-$17.50 and more significantly, the $16 level, should provide support in the days/weeks ahead” , which levels we continue to monitor.

 

 

 

 

Last week we noted, “While oil finds itself in a short-term overbought position based on its relative strength reading of RSI 70, as well as experiencing gains in eleven out of its past twelve trading sessions, we would not be the least bit surprised to witness some pause/consolidation in the days/weeks ahead in order for crude to ‘catch its breath’”, which followed out script to a ‘T’ as Crude slid the ‘slippery slope’ in last week’s trade with ‘black gold’ paring all of its previous week’s gains and ‘then some’ finishing lower by 6% and closing out at $77.95bbl. Despite the recent ‘slippage’, we’ll reiterate our thoughts of past week where we penned, “Nonetheless, the trend is positive and perhaps after a bit of ‘backing-and filling’, higher prices may be in the offing? Moving forward, crude finds ‘potential’ resistance
in the 88-90 zone, while the 77-80 area should lend support”, which remains relevant today.

 

 

 

 

The $USD index slid below its 20-Day moving average early in last week’s trade as the ‘greenback’ spent considerable time trading at support and its 50-Day moving average (76.80ish). When the week had concluded, the index finished with minimal losses to close out at 77.18 with the ‘buck’ residing at short-term support. While the $USD index continues to consolidate its December thrust and remains in its neutral posture via a relative strength read of RSI 52, we’ll echo our thoughts of last week when we noted, “the index continues to find congestion/resistance in the 78-79 zone (78.30ish/200-Day), as well as the 80-81 area, while the 77-77.50 and 76 levels provide ‘potential’ support”, which remains the case today.

 

 

 

 

 

  

  

                                            

 

 

  

  

 

 

 

  

  

  

Energy XXI Limited  (EXXI)  3.47; On pullbacks back to support at 2.80 and more aggressively above 3.81

 

 

Pacific Ethanol Inc.  (PEIX)  2.13; On pullbacks to support at 1.60 and more aggressively above 2.75

 

 

Sociedad Quimica Chile  (SQM)  42.13; On pullbacks to support at 40 and more aggressively above 44

 

 

U-store-it Trust  (YSI)  7.49; X Crossing 7.85

 

 

 

 

  

  

  

Cintas Corp  (CTAS)  26.24; Breaking below 26

 

 

Medifast Inc  (MED)  22.62; Back to resistance at 26-27 zone and more aggressively breaking below 21.80

 

 

Petroleo Brasileiro S.A. Petrobras  (PBR)  45.37; Breaking below 44.40

 

 

Syntel Inc  (SYNT)  35.07; Back to resistance at 37-38 and more aggressively breaking below 34.40

 

 

 

 

  

  

  

  

  

Have a profitable week of trade!!