Going into this shortened week the market tumbled a bit on Friday before recovering at the end of the day. It will be interesting to see how earnings affect this market in the coming weeks but I tend to think we are too optimistic ahead of earnings and we should come back to retest the 50 ema on the SPX which is near 1110. I would be surprised if we break out to new highs without trouble. This market has gone straight up in January and needs some rest imo.
Volatility is so low that we could easily just chop around and form another range to mark time instead of the sharp correction most fear when markets become overbought. In strong bull markets you can just as easily see a time correction that takes prices back to an average instead of a price correction that happens faster.
Either way I think it would be prudent to watch tech earnings this week and continue to watch the banks to see if those two sectors can get anything going higher. Energy is the wild card and appears to be pulling back since oil hit new highs last week right before the US Crop report signaled more supply of grains planted. The commodities should stay under pressure for now I believe as the charts were also over extended.
Currencies are in their own world right now as it relates to the stock market and it looks like the euro is about to make a fresh break lower to new recent lows under 1.43. I think we could see the euro head back to 1.38 on this selloff from the daily. Watch to see how the commodity currencies do in repsonse.
Buy the dips>> SHLD, AAPL, GS, CVS, LVS
Sell the rips>> POT
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