Well, this is strange. The standard pivot points are not where I remember them when I posted them at the beginning of the month. Either my memory is faulty (a distinct possibility) or the pivot points have changed. I will have to go back to that post and take a look at the chart. Anyway, we are now long past R1 (I remember R1 being at 1307), and are 2 points below R2. Since R1 put up no resistance, there is no reason to believe that R2 will either, but it might turn out that way. CMF is now at a very high level (higher than at any point in the last 6 months, admittedly that is not saying much). The rally I expected in January has now gone longer than I expected, but it also has hit the target I expected, but right now, it looks like we will probably go higher.
Here is one reason to believe we are going higher: The Nasdaq has squashed the down trend in price relative, and it is now heading up. It made mince meat of R2, and even by the most conservative estimate, looks like it could get to 2840 without too much effort.
The Russell 2000 is hanging in, but price relative refuses, so far, to break out. This is also sitting right on R2, so we have to wait to see if it can break through it. If the SPX keeps going up, this will follow.
| Ticker | Relative Strength Index (14) |
| XLY | 71.54 |
| XLV | 70.54 |
| XLB | 70.29 |
| XLI | 68.79 |
| XLF | 65.25 |
| XLK | 64.38 |
| XLP | 58.75 |
| XLE | 56.5 |
| XLU | 47.08 |
Here are the sectors ranked by RSI. The big surprise is the rise of XLY.
XLY has had a pretty good week, good enough to put in to first place, but overall does not look that strong, and volume has been a joke. The target I have projected for it looks far away, but is actually about a point and a half away. It could hit it, but with this kind of volume, it might take a month.
XLU, which not long ago was by far the strongest sector, got hit with sector rotation on the first day of this year, and has been dropping since. It now appears to be settling down, and has a couple of blue Elder impulse bars, so we could see a trend change coming, but unless the money that left starts coming back in, this won;t move up very far.
The market continues to rally, seemingly for no reason, and shows no signs at all of distribution. Some of the more speculative areas, such as XLY and XLK, have been getting bids, and even XLF has stopped crumbling, so this rally is probably going to last a lot longer than I originally expected. But, we shall see.
I will have the new highs update shortly.
