Weekend report!

For 5 years, we have been telling you the economy was just ok. We have been telling you we will go back and forth from decent quarter to a blah quarter. Well, after $13 trillion of printed money,  zero percent interest rates and $7 trillion of new debt…combined with the latest moves by Japan, Europe and China…maybe things have picked up a notch here…but just a notch. We are not sure it will last but will keep our fingers crossed. It’s about time. The fact is this is the worst recovery ever…brought to you by Mr. Obama…but he is taking victory laps anyhow.  Of course, if things worsen, it will be back to Bush’s fault.

The large cap market remains stretched, extended and overbought. Bullishness is back to running rampant. But so far, any selling continues to be picked up on an intraday basis. The most important part of the equation is that the Semis have broken out and now, big cap Financials are breaking out. Last week, we told you they were setting up…and now they are moving out. Nothing bad will happen if these two groups are leading.

Just keep in mind it is very much a two-way tape as many areas remain in bearish mode. We would continue to avoid:

Energy/oil &gas

Solars

Steel

Coal

Gold and Silver

Mining/Construction mining

Ores

Gaming

Commodity-based countries (Russia, Brazil)

Bldg/cement

All these areas can bounce at any time but the big picture is that they are in downtrends.

And again, small caps continue to underperform. They did show a little better relative strength last week but not enough to change the stance.

It is December where typical seasonal bias is in effect. If serious distribution shows up, we will let you know. Keep in mind, the ECB has now telegraphed a mere trillion…so the maniacal easing and printing continues.