Thanks opti. I got my finger on the trigger and it's itchy.

The Utilities continue to be a sector in favor for new money. The real breakout already mentioned on a previous post, was 390 on the DJ utilites. In favor are the XLU Jan 30 calls (time did tell) which are up 87% in 9 days from the breakout. Congrats to all who got involved.

Currently in favor, FCG Mar 17 calls. Just my opinion.

I'm keeping an eye on UUP for a 10-50 day moving avg. cross for confirmation that the U.S. $ is in a confirmed uptrend.

Hi Will:

I am not looking for FCG to skyrocket over the next few days/weeks. The open interest and the extra 2 months are worth the .40 cents, in my opinion.

New closing highs for the year were reached by most of the majors indices yesterday. The bull is sill intact. The rally was led by the Utility Index, followed by the Transports, S&P, Nasdaq, and the DJIA, which all closed at new 12-month highs. 　

The utilities are in a major breakout from a long bottoming range with next resistance about 20% higher. XLU could challenge 37.

We have a classic case of a consolidation that follows a strong rally, as the DJIA continues to trade in the same 10,200-10,550 range for the past five weeks. The DJIA has bounced from the 10,200 area and turned back from the 10,500 area on four occasions in this recent consolidation. There are now new recovery highs by the transports and utilities along with the advance-decline line as the broader market catches up to the large-cap indices.

Technically, this is a very constructive pattern with a high likelihood of resolution to the upside. The low end of the range should hold again, but it’s resistance number at 10,500 that is more important to break. This area is right near where the longest-term down trendline from the bear market cuts through, and it’s near the 50% retracement level of the entire bear market. This simply means its resistance at its finest. However, a break on volume above the recent 10,550 range would be further confirmation of the bull trend, and should be good for at least another 10%-20% of upside potential.

Post edited 9:02 am – December 21, 2009 by optimism

Hey there spreadtrader, thanks for the confirm. Speaking of sectors……. here is my outlook from Most to Least timely.

1) Utilities- Most timely

2) Industrials

3) Health Care

4) Consumer Discretionary

5) Technology

6) Energy

7) Consumer Staples

Materials

9) Financials- Least timely

Post edited 8:54 am – December 22, 2009 by optimism

The S&P 500 is close to breaking out above a series of peaks in the 1115-1120 zone, and a clear breakout through 1120 could signal the beginning of an additional 5%-10% move to the upside. The heavy volume resistance is in the 1250 area and higher, which is another 10%+. The other major indices are also poised to move higher and confirm the bull market. Look forward to some capitulation in the conversion of more bears into the bullish camp. Santa Claus and the bulls are coming to town. Time will tell.

Post edited 5:24 pm – December 22, 2009 by spreadtrader

I use a RS chart with 3.25 box size of the PDP v. MNYMKT charts at DWA. The chart tells me whether to be in "cash" or other assets that are not correlated to U.S. stocks or U.S. stocks as reflected in the S&P. If you plot the signals, allocating to U.S. stocks correlated to the S&P when the X's flash a buy and go to 'cash" when the O's flash a sell signal and plot those dates on the S&P chart over the past 10-12 years you would have cleaned up…….flat out.

If you subscribe to DWA, let me know and I'll direct you to an archived article at the site where you can read all about it. It's a remarkable tool for anyone who does not want to trade often (about a dozen signals in 10 years), or for someone who does not want (or does not have time) to pick stocks.

It's also great for someone like me who wants more than a dozen trades in 10 years but likes swimming with the current.

spreadtrader said:

Post edited 5:24 pm – December 22, 2009 by spreadtrader

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If you subscribe to DWA, let me know and I'll direct you to an archived article at the site where you can read all about it.

Thanks a lot for the info! Yes, I do subscribe to dwa, and would be very interetsed in this article. Thanks again ! 

The market is now closing in on a breakout through the series of recent tops the DJIA has had in the 10,500 – 10,550 zone. A breakout would be a positive indication for another 10% of upside potential. The market strength comes at the same time the dollar has rallied out of a declining trend that can now be called bullish. Interest rates have also risen, with the 10-year yield moving up to over 3.7% from 3.2% during this same 3-week period. A rally in the stock market, the dollar, and interest rates is strange, yet maybe there is something else going on that may drive all three higher over the next few months. Looks like a good old-fashioned Bull Market to me. Merry Christmas to all.

spreadtrader said:

Hope this helps…….and thanks again with best wishes to farley 5 for opening this door for all of us here.

Thanks a lot, spreadtrader! And best wishes to all for the holidays and New Year.

The market is in a powerful cyclical bull that could last for several more months, & this is happening within a secular bear that the net-net goes nowhere over a long period of time. The DJIA saw the 10,000 level first in 1999, and then more recently again in Oct. of 2009. During that 10-year stretch, it crossed this level in both directions, and during this time traded anywhere from 20% to 40% above or below that number. Now we are headed higher once again, and the DJIA will need to get back to near the former highs around 14,000 before investors become overly-bullish and the risk of another major pullback increases once again.

The majority of stocks have rallied during the first part of the recovery, and most groups should continue to climb into 2010, with the exception of the financials. The financials may have brief rally periods, but they are not in the same bullish technical trends as most of the other groups. Expect market pullbacks to be limited to roughly 10% during this uptrend, with an eventual top being spread over a period of several months. Cycle indicators look for a peak sometime in late summer or early fall, and at that time you could become much more defensive. Time will tell.

The old adage is "As Goes January, So Goes the Year’’- except for last year. January ‘09 was the worst January in 60 years with a performance of -8.6% for the S&P 500. Then a significant recovery began in March that may lead one to believe "the harder the fall, the sharper the recovery".

So what about the here and now? The January statistic is still around 75% accurate for a yearly prediction, which is significant, but still far from certain as witnessed last year. Keep an eye on sector rotation which over the past month has seen a re-emergence of small-cap growth stocks out-performing the large-cap value groups. This has happened as both sectors moved higher in a leap-frog fashion. Stay bullish.

Precious metals is a favored sector and not overbought due to the recent correction in December. I think this rally may have some legs. Like Opti often says, time will tell.

The major equity markets began the new year and decade on a positive note. Optimism about a global economic recovery drove stock prices higher, both here and abroad. For the week, the S&P and DJIA rose 2.7% and 1.8%, respectively. The leading sectors were Financials, Materials, Industrials, and Energy, all of which rose an astonishing 5.0%. 

It was Monday’s session that was particularly strong, with the major U.S. indexes rising around 1.5%. Better-than-expected manufacturing data was a key catalyst. The ISM Manufacturing Index rose to 55.9 in December from 53.6 in the previous month, and higher than economists forecasted. This index is closely watched among investment professionals because it tends to lead activity in the broader economy. When the Index is above 50 and trends upward, typically the economy improves over the near term. 

Despite the increase, bears were NOT convinced after the organization that compiles the data acknowledged much of the increase was due to seasonal adjustments. Actual U.S. manufacturing activity may not have been as strong in December as the report indicated. Regardless, it is doubtful that this key manufacturing index has peaked for the cycle. 

Global equity markets also rose Monday on data indicating continued strength in China’s economy—albeit at a bubbly pace in some Chinese sectors such as real estate. 

Trading for the remainder of the week was mostly uneventful, although the S&P did drift higher on light volume. The markets rose slightly on Friday, but were held back by the disappointing January employment report.

The fourth-quarter earnings season, begins next week. this will set the pace for stocks in the near term. Stay bullish.

I can't publish it, but I'll send it to you.