Sunday, January 22, 2017

Game Time

The SPX continued its sideways dance last week with the NDX streaming ahead on the back of Netflix, while the DJIA faltered somewhat.  As most of you this Sunday afternoon, most of my attention is focused on football.  So this weekends post will be brief with little change in outlook from last week.

Looking at the overall Indicator Scoreboard, bearishness remains at low levels after reaching a momentum extreme low.  An advance toward the mean is not unlikely before a correction begins.

The Short Term Indicator (VXX $ volume and Smart Beta P/C) is in a similar position.

Looking at the SPX 3x ETFs SPXU/UPRO shows that bearishness is becoming more compressed to the SELL side, leaving little hope for those expecting a breakout rally at this time.

The strongest index, the NDX, show bearish sentiment about as low as it can get using the 3x ETFs.

Sentiment for bonds (TNX) using TBT/TLT showed a surprising drop in bearish sentiment even as rates rallied back to the 2.5% level.  Not what you want to see if you are a bond bull.

The gold miners (HUI) continue to bet on the reflation trade at the same time as the HUI stalls out at the same level as the early 2015 rally top.  Sentiment for bonds and gold indicate the advance in rates with continued pressure on gold is just ahead.

Conclusion.  Not much change from last week.  All signs are pointing to tops in January for a variety of assets, as I continue to believe that higher rates are the biggest concern going forward for most of 2017.

Weekly Trade Alert.  We did not get the expected move last week for the SPX to 2285-90.  So I am moving my timing top to the EOM.  Short at 2285-90 with a stop at 2300.  Updates will be posted @mrktsignals if a trade is recommended or any change in outlook is necessary.

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