Weekly Blog Update – Week ending 11/21/2014
Another week and another set of new highs in all the indices – PBOC cutting rates set off a rally in the markets Friday and the world central banks pumping heavy liquidity is driving markets higher. The US markets are the sole investment for the world investors for the best returns. Stock markets and stocks are trending higher without a hint of any correction or pullback. We stated that the trend was higher going into the holiday season, and we expect that to continue or for the markets to be range bound. There was a breakout in the S&P500 and the major indices this past week and even though the markets appear over bought – this can last into the New Year. The pattern on the chart indicates higher highs are coming and there is major complacency in the markets. But typically we do not expect to see any major issues due to the strong Q4 tendencies. Certain sectors were sparked due to the PBOC cut – like the commodity sector, machinery sector and the emerging market ETFs.
We are seeing oil bouncing back, and we will short the airline stocks this week for a short term trade. Gold bounced back last week but the trend is still down. We will be watching the gold and oil sector this week. Some of the ETFs we mentioned OIL and USO are coming off lows and the energy stocks, which were hammered recently are bouncing back. Keep an eye on these oil sector stocks – NOV, NBR, DO, CVX and many others in the energy complex.
We are long WSM, CYBR, YELP and short AEM, IBB and waiting to short the airlines sector this week. This will be a short trading week but expect consolidation and range bound markets. Here are some charts to ponder over this week. You can see clearly the UPRO (long SP500 ETF) is very overbought and the DAL chart is breaking down.
Charts for the week:
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