Trending recap for Week 2
This will be the first full week of trading in the new year. As a recap, markets did reasonably well last week. The S&P 500 had 2 up days and 2 down days. However, the up days were better days and the net result being S&P 500 up +1.45%.
The global markets will end up being the leaders if we are indeed in a transition from bearish to bullish reversal. The S&P 500 is still technically not turned short-term bullish per my models. But it seems close.
From global markets perspective, China FXI is looking the best followed by the Eurozone EZU and the EAFE markets EFA. The Emerging Markets EEM also look good. Overall, I would say there is a good chance we are turning short-term bullish. Note that still does not change the longer-term bearish trending yet.
Within the US markets and looking at the individual sectors, Financials XLF look good and Technology XLK continues to look bad. Note that later this week we have many of the big banks that release their earnings for the last quarter.
The XLF is trending very well. It is up +2.6% in January, up +2.14% over 1 month and up +14.44% over 3 months. The XLF has several other sub-sectors other than the banks of course. That could also be its strength. I will be looking to make a bullish bet on the Financials using the XLF.
Then the Energy sector as a whole is interesting. There are clear winners and losers. The Oil Services OIH is trending bullish while the Oil & Gas XOP is trending bearish. Overall Energy XLE is bullish, but OIH is the standout sub-sector within that.
Last but not least, the precious metals continue to trend well. I continue to remain long Gold GLD, Silver SLV, Gold Miners using GDXU and also the Junior Gold Miners GDXJ.
Conclusions:
I will look to reduce my SPX and QQQ shorts in the face of a possible short-term reversal from bearish to bullish trending in the markets.
I will look to go long Financials XLF, Oil Services OIH.
I will watch China FXI for any pullback as it looks overdone to me. I will go long on pullback though.
I will continue to hold my trades on precious metals.