Weekend Market Notes…

By Gary Kaltbaum- November 27,2016

We can continue to be quite succinct with the market on both the good and the bad.

As far as what has been working, the worst thing we can see is that they are way, way, way overdue to pull in. All are stretched, all are extended and all remain due to revert to some sort of norm off of the post-election rally. We are talking all the major indices, especially the Russell 2000. In fact, since the election, the S&P is up 3.4%, the Nasdaq 3.9% but the Russell is up a whopping 13%! Keep in mind, a lot of the Russell has to do with the many smaller financials inside the index. If ever the financials decide to pull back, the Russell will pull back more. We also make note that while the pre-Thanksgiving trading usually has a bullish bias, the two weeks after usually leans negative.

So…

It is nothing but good when the Dow, S&P, Nasdaq, NDX, Russell 2000 and the Transports are in new yearly high ground. It is nothing but good when all are extended and cannot even muster a pullback.

It is nothing but good when the financials are leading…when the semis are leading and when previous weaker areas have come on like gangbusters…namely industrials,materials,metals, steel, insurance, restaurants and even a bunch of retail.

It is nothing but good when the market starts off quiet and finishes near the highs of the day.

It is nothing but good when extended gets more extended.

Of course, the same areas we have been bearish on…remain bearish, that being the bond market, utilities, real estate, food,drugs,beverage,tobacco,household products, emerging markets, junk bonds, gold/silver some of the mega-cap tech/internet and a few other areas. Keep in mind, just as the strong areas are extended to the upside, these weak areas are extended to the downside and could start bouncing.

So…while there is still enough that aint working, there is plenty that is working…and one should not argue. We will be looking for constructive pulling in of the best areas. We expect any pullback will be controlled and rotational right now.