Today was a near mirror image of yesterday - this time a strong morning and a weak afternoon. That is unlikely to change the big picture, which is a pullback in a bullish chart pattern. We did get higher volume today, but did not get the decline necessary for a distribution day (at least, I don't think so. IBD says we have 3 distribution days on the SPX, but I don't see any after December). The momentum indicators (RSI and MACD) are rolling over, but it looks like we are just working off mild overbought conditions. Until proven otherwise, this is the time to be preparing for the next leg up.
WTI is still consolidating along the 50dma as it has been for the last couple of weeks. The mid point of the trading range it is in is about 97.50, and as long as it can stay above that, I remain bullish here.
I have been trying to be bearish about gold, but it is now pretty clearly building the right side of a long base. It is now a little extended and could pull back at any time, but overall I would say the trend is up. When gold rallies like this, I get the feeling something is coming, and it could be quite unpleasant.
If the gold bugs are nervous about something, the bond guys are in a near panic. I have been trying to make sense of this chart for months, and just can't fathom what these guys are thinking. I would say it's a safe bet these guys aren't nearly as optimistic as stock traders, and they are rarely wrong.
UUP was up marginally today, and the dollar might have been as well, but the two charts are very different. This looks like it's a sure bet to hit the 200dma, which would have sent the market rallying in the near past, but the correlation is very weak now.
So far we are looking at a very mild pullback in a pretty strong up trend in the market. An up trend that has lots of warts, particularly in the lack of leadership. This pullback may give an opportunity for some big leaders to emerge, and I will be watching closely for that.
I will have the new highs update shortly.
