video Market recap for the week ending friday december 5, 2014

Friday, December 5, 2014 Weekly Market Recap. Watch Video Here

         Large Cap stocks  truly have gone nowhere in the past 2 weeks. The S&P 500 is stuck in a tight 25 point trading range between 2050 and 2075. At this point, no sell signal was given by our trading system and we still have a position in SPY open.

Market breadth for the large caps is mostly bullish. Bears have a lot of work cut out for them to turn this ship around.         

The Russell 2000 appeared to break support on December 1, but rallied back up. I am now waiting for AROON Red on this chart to make another high to short the Russell 2000. This may or may not happen, Russell might make new highs and turn bullish once again.

The reason Russell might make new highs and not roll over is yields. Bonds came under selling pressure this week as a result we pared our holdings in bonds and Treasuries.

Because of bonds loosing ground, regional banks have rallied hard and likely broke to the upside. (Regional banks make money by borrowing at short-term rates and lending at long-term rates. If rates rise, regional banks have wider profit margins). If we look at the composition of the Russell 2000 index we see that it is composed of as much as 24% financials. Should bonds continue to drop, Russell 2000 will likely benefit.

Gold miners are indecisive. We have an open position in DUST (inverse gold miners), but GDX has been stuck in a trading range. A break below $18.40 would open the door to a retest of lows at around $16.60.    

Energy prices continue to slide with no end in sight. USO lost over 4% this week.    

XLE is down a few percentage points. Should XLE break support at $78.50 we may see a significant acceleration of XLE price to the downside

That’s it for this week’s recap!

Best Regards and have another great trading week!

 
Alexander Berger (www.MasterChartsTrading.com)
 Disclaimer: we have open positions in SPY, TLT (took profits), DUST, ERY
Closed positions: AGG