Monday Morning

After being up a little all weekend in the futures market, the equity market gaped open this morning, and at 11:10 the Dow is up 89 and the SPX is up 11.10.  All the other major indexes are also up.  The RUT, COMP, NDX, SPX and the INDU are trading at new recovery highs, while the TRAN, while aslo up on the day, is still well away from making a new recovery high.  The behavior of the TRAN is in direct conflict with the rest of the equities indexes.  This is called a non-confirmation and the Dow Theory guys are getting real anxious.  This non-confirmation has been going on now for over 2 weeks.  I suspect they are about ready to call "BS".

Concern over Egypt seems to be diminishing, at least as that concern is reflected in the price of oil.  Oil is down this morning, trading at 88.77.  Gold is up, trading at 1350.10 as is silver, trading at 29.28.  The commodity complex is higher across the board, with Wheat, Sugar and Rough Rice and Cortton being the largest percent gainers.  The Euro is soft again this morning, trading at 1.352 and the Dollar continues its bounce, trading at 78.14.  I pointed out my concern last  week with the debt markets, and my concern grows this morning.  The 10 year Note is again off, trading at 3.674% and the Long Bond trades lower at 4.747%.  The break in price support for the note and the long bond is now clear... Higher rates are clearly on the way and this can't be good news for the equities market.

While equity index values continue to advance, that advance does not look pretty on the charts..... The Relative Strength Index, with out exception, continue to reflect waning support.  Below are the charts for the NDX, RUT, INDU, SPX and the TRAN.  The text books all state that declining RSI precede declining prices.  But those text don't tell us how soon..  Our Momentum Change indicators are still reflecting the 11/20 Sell signal, but as of this morning, they have moved back to neutral. We are coming up on another series of timing signals looking for a top in the middle of February, so we will wait for either a new Sell confirmation or a Momentum Change before taking another position.

Here are the charts.......

Best To Your Trading!

Bill