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Joe Friday’s famous line was…“Just the Facts Mam!” The Facts... broad markets remain above support and inside of their respective flag/pennant patterns. As of Friday morning, pre-market, the NYSE and 500 index remain lower on the week!
Relative weakness winners, like basic materials (IYM), remain over 2% lower on the week and again reflected relative weakness yesterday as the S&P 500 gained almost 1.5% and IYM was flat for the day.
In the past, during quality broad market rallies that lasted, you didn’t see sectors such as basic materials reflect this type of weakness!
We need some kind of black swan and soon if these patterns are to breakdown. When central banks start using this kind af artillery fire and money managers have no place to pour money but stocks, not a lot of good can happen on the short side…
Even for a bear market rally, a few things strike me this week. The Euro appears to have found a base. Bonds appear to have topped with the big bond yield bounce today. Gold appears to have found a base. USD and Bond Sentiment is at extremes. All of these are highly coorelated so it is good to see agreement. Commodities already got the memo several weeks ago so here is their fighting chance for a breakout. Even if it is a bear market rally, there should be enough powder major bottoming here to at least make it a profitable rally.