I know I am on a role with this chart thing on the post this week, but they show better than I can write what is taking place during this transition period in the broad indexes. To review some this week of importance we looked at XLE for Energy Sector and it continues to build a base now and if it can break back above the $82 level it would be a positive moving forward for the sector. Crude oil has stabilized near the $67 mark per barrel and if it can hold is a small range short term it would allow the balance of the market to find some normality going forward. The VIX index has returned to the lows August and show no signs of concern from investors. Small caps bounced of support at 1153 and are holding the upside currently in play, but doing so with volatility. Not for the faint of heart if you don’t like see your position up and down daily. Semiconductors continue provide leadership and has establish a new highs currently. Retail has started to redefine itself following the weak data from the Black Friday sales week. It is becoming a stock pickers sector and worth digging in to find the leaders. Russia is selling lower as the price of crude impacts the outlook for weaker GDP as the economy is predominately energy based. Natural gas has joined oil on the downside and broke support on Thursday. China has established an uptrend and if you can stomach volatility you would like the results over the period, but day to day you would be on a roller coaster. Biotech has been a leader on the upside, but has stalled and is consolidating at the high… need to see this follow through higher if it is to continue. All are still on our watching list for opportunities as they unfold. Tonight we add a couple move to the mix.
First is China again… The picture is worth another look at how it continued higher despite the volatility. Note the uptrending channel in play and the breakout on Thursday above the channel. Money flow has been positive and regardless of the negative press on fundamental data the upside has been in play.
Next is Financials. The test lower in early November was a negative for the sector, but it has managed to continue higher and the last two days hit new highs. The move has only been 1.3%, but it still a new high. Still looking for that data point that would push this into a solid uptrend versus a drifting one. Despite that it has still managed to hold the upside move.
Next is the NASDAQ composite index. The last five days is where I am looking on the chart as it shows a nice wedge or triangle consolidation. This should provide a directional break short term for the index. Semiconductors have been the leader, but it cannot carry the index higher by itself. Look for the catalyst going forward.
There is always something to watch as the markets continue to determine the next leadership and direction it will take short term. The longer term trends remain on the upside currently. Patience as it all unfolds.