Friday Weekly Charts

It hasn't been nearly as strong as I expected, but we did start the year with a rally. At this point I thought for sure we would be breaking the 1292 barrier and heading for 1307, but the tepid move up we have so far is telling me of two possibilities: 1) the rally is about to crap out and we are headed for a pretty substantial move down; or 2) the market is pulling a "rope-a-dope", most likely with a sharp move down, then followed by a rally to 1307. In either case, ultimately the trend in January will likely be down, but not before it fools the maximum number of people.

With a new year, we have new yearly pivot points, which I have highlighted with the horizontal lines. They are incredibly close to the trading range the SPX established last year, and for most of this year I expect we will be in between P (the middle line) and RI (the top line). I expect both lines to be tested, and at least once we will probably break P and spend some time int he bottom half. If either the top or bottom lines are broken, watch out.

Here is the Nasdaq, with pivot points almost exactly lining up with last year's trading range. The pivot points are much less optimistic for the Nasdaq, and frankly this chart looks a lot more bearish than the SPX, 

 The Dow has been much stronger, giving it a more optimistic price target for the coming year, and I will be surprised if it doesn't hit it. That is not bullishness, that is actually bearish for the overall market.

The Dow transports are not as strong as the industrial, but not as weak as the Nasdaq. I would like to see these start leading again before getting bullish again. 

The Russell 2000 really has me thinking bearish. This is barely above the middle point, and will have a lot of trouble getting to even a test of the upper point, that is, if things stay the same. If they get worse, expect a test of the bottom pivot, and if that is broken, I hope you have a hard hat, because the sky will start falling.

We are a week into 2012, with very little clarity, but wioth the very weak rally we have had so far, I'm not really optimistic about where we will be at the end of the year. Of course, according to the Mayans (or the Toltecs, I forgot which), we don;t have to worry about the end of the year, we won't last that long. They must have known something about Wall Street.

I will have the new highs update shortly.