Our job is to report on the big picture and the major trend. Right now, there isn’t any major trend. The market is in the soup trapped between the highs and the recent lows. The major trend to the upside ended January 29 and in time, we will find out if this is just an intermediate term correction or something worse. It is simple to lay down the markers. The recent lows are vital. Not only are they support areas but longer-term support areas in and around the all-important 200 day average. So far, they hold. But as we have stated, we are doubtful as to how far markets can get going because there are just too many names and too many areas not bullish.
On the upside, major indices have rallied up and into the 50 day average but just when you think they can go topside, we get another big gap Friday only to sell down hard…until a decent move in the final few minutes.
We are now into earnings season. If we see more of what we saw Friday with some important financials selling down after strong opens, then get out the worry stick. JPM reversed on big volume. WFC is dead. PNC falls off a bearish flag and C reverses also. More of that will be a serious problem.
As we have stated, the only area really emerging is OILS/ENERGY as oil prices have gone topside. OPEC has been lowering production. Venezuelan production is back to where it was 70 years ago (not kidding). And lastly, geopolitical crap does not help. We would also make note that a few GOLD names are now hitting the screen as GOLD prices hover near yearly highs. Other than that, stay tuned as a few thousand names report. We suspect markets will show their hand in the next few weeks…if not sooner…and also expect many more gaps and reversals as markets are somewhat insane not only during the day but overnight.