Friday, November 21, 2014. Weekly Market Recap.

Video link for this presentation
The S&P 500 and other large cap indices continued to make new all-time highs and surprise many analysts (including myself).

         In my view Friday’s action could look like an exhaustion gap. The S&P 500 gapped up at the open and then continued down all day to close near the day’s lows, all this on above average volume. Could it be the beginning of a long-awaited pull back? Only time will tell.

Market breadth for the S&P 500 is still bullish, but as I mentioned before very overbought. The overbought condition can persist for an extended period of time, so I am keeping my SPY position open after taking more profits recently.  The Russell 2000 feels different then the large caps. Our system generated a short signal on November 19 and I opened a very small position in TZA. 

Bonds got a boost on Friday in the face of a surge in stocks. Why would investors be seeking safety of bonds when stocks are making all-time highs? I already have small positions open in AGG and TLT since November 7, but will add to them shortly should the conditions for addition to the position be met.

Gold and gold equities continued their bounce from our entry on November 14. We are up about 6% from the entry into this counter-trend bounce. 

Oil got a little bit of a boost, or at least it may have stopped falling. USO is still in a downtrend and our system did not yet generate a counter-trend bounce signal.

         Oil related equities are holding up OK and continuing up. Should USO flip into buy signal, XLE is likely to benefit.

Best Regards and have another great trading week!
Alexander Berger (www.MasterChartsTrading.com)
Disclaimer: we have open positions in SPY (took profits), TZA, AGG, TLT, GDX, and XLE (took profits)