Weekend Review 01/06/12

Tomorrow AA announces and earnings season commences.  The past 6 weeks have been have been holiday oriented and news event driven so tomorrow represents a fundamental catalyst that will influence the market and should also show signs of increased participation.  As such, a change in market character should be anticipated and a plan of action prepared.

Currently the market is still range bound and lacking momentum.  This can be clearly noted from looking at the major indexes by price percent change 26 weeks which indicates the NASDAQ is down 6.59 and the Russell down 12.06 over this period.  Additionally, due to the volatility that has occurred over this time, set ups have been few and far between, and those that have broken out have had a high failure rate.  At times it seemed like it would have been better off filling pant pockets full of coins and starting a wash cycle.

In preparing for the week ahead, one metric that stood out has been the lack of stocks that have moved 25% over the past month.  This suggest a lack of broader buying and participation in the move during this time as this number had decreased from a recent high of 197 while the indexes have increased.

MM 01/06/12

Overall the indexes moved higher this week in large part to a significant gap day but the primary indicator I use has shown some divergence as well shown by the green line sloping down.

Primary 01/06/12

Finally the last point I noted this week is that the $USHL5 has put in a higher high, but given the weeks action it hasn't increased much over the past week.  It would be a more encouraging sign to see this rise much more rapidly.

$USHL5 01/06/12

Another hint of the current state of the market can be gleamed from the IBD 50 components.  As there is no choice but to have a list of 50, the quality of the list gives a good indication as to the quality of the market.  This weeks edition looks like slim pickings.  Maybe Intel is capable of going up 100% this year for all I know, but I doubt it.

So, the only thing remaining now is to watch how this week plays out and react.