The McClellan Oscillator is in overbought territory, and the VIX is near its lower Bollinger Band on the daily chart. So, those are cautionary signs for the bulls this week.
The IWM finally broke decisively above its October 6, 2008 gap, though it took 3.5 months to do so after I first posted the chart back here. The IWM may be intending to fill its TARP gap like the QQQQ has done. To do so, it needs to hit 70.63, which is another 10% up from here.
DIA has not broken out of its range yet. To see why, just pull up a monthly chart of XOM and take a look at its December candle. Nasty, right? XOM did manage to rally a bit on Friday, and if it can extend the momentum, that might be an indication that the wave of redemptions that has hit mutual funds is easing up.
Now that Christmas is in the rear-view mirror, let’s see if businesses go back to slashing labor costs. The UPS guy will be making less overtime pay, and department-store Santas have been given their walking papers, so if the payroll data holds up, then that might be a sign that something good is happening on the jobs front. And if something doesn’t happen soon, the Democrats are toast at the mid-term elections in November. Their campaign slogan will be: “We didn’t bring your job back from China, but we’re giving you free health care.” That will work about as well as the Republican’s “Recession? What recession?” slogan did in 2008.
Take a look at the IYT’s intra-day chart from Friday. The pattern is not an exhaustion gap, but it looks similar with that early-morning peak. It may have just printed a double-top with the December 15th peak. If it sticks this week, that would be a bearish omen.
The XLF’s 50-day moving average is threatening to cross below the 100-day. It’s not a death cross; just a gravely-ill cross.
Like it or not, Iraq is part of the American Empire, and I was amazed when the Iranian army seized one of our oil wells in Iraq recently. It isn’t often that somebody tries to bite off a piece of US turf. What was even more amazing was how the media down-played the event. Why would they do that? I think they were trying to help the president save face. But there is no way around the fact that the Iranians gave Obama a slap in the face. The Iranians have pulled out, but don’t be fooled – that was a significant event, and it’s a good idea to read George Friedman’s piece on the subject. In short, if the Iranians think an Israeli or US attack is coming, they have tactical incentives to begin the festivities themselves.
Note: President Bush got a nice slap from the Russians when they captured four US Humvees during the Georgia invasion in 2008. As far as I can tell, the Russians never gave them back. Here is the most recent info that I found on the subject from the BBC:
“…a senior Russian commander, Gen Anatoly Nogovitsyn, said four captured US Humvee armoured vehicles would remain in Russian hands as ‘trophies’.”