Beginning of cycle season
At first the futures didn’t like the number, but the rally phase is so overpowering they overcame it to finish higher. Part of it was due to the best we’ve seen in oil in quite some time. Keep in mind that this is coming to the sweet spot for oil for the year.
In March, we are starting to get close peak driving season, so oil has the wind at its back. It’s about time oil starting behaving like it should. From here on out we have to see how well it will behave in a countertrend move because this is still a bear market with the potential to get down to $10.
Those charts show you where we are in terms of more important resistance. The Transports has been leading to the upside which is really the best thing this rally has going for it. I’m not sure if we can say the market finally has benefitted from cheap oil, but if that’s the case with oil finally breaking, that party could be ending soon.
You can see they are closing in on the 200dma while the important SOX is right at an important connect-the-dots trend line. Other charts are currently testing their January breakdowns. My sense of all this is that the easy money has been made. While we don’t have too much in the way of divergences, the SPX has done better than technology because biotech has not become the rampant life of the party, even as research suggests they could be on the cusp of a cure for cancer.
If I have to pour cold water on anything this would be it. Compare this to the SOX and Transports. There is no comparison. So here we are coming to the second week of March and charts that topped on July 20 will be hitting 161 trading days to that pivot. It could turn out to be the first sign of trouble. For instance, this BTK chart topped on July 20 and will be hitting 161 on Tuesday.
This is the beginning of cycle season. The really important cycle doesn’t hit for another couple of weeks. In my Saturday report I’ve also seen many commodities do better. We know about oil but grains, sugar, coffee, cotton and palladium to name a few have all done better and I can’t remember a period where they all performed at the exact same time. In fact, cotton is 261 weeks off its top and is in a position to make a long term bottom if it so chooses. But the reason this may be so significant is we are coming to the Gann Master Time Window and cycles do have a tendency to end hard. We’ll see.
I suspect the heavy bullish action we’ve seen these past weeks should begin to cool off and the divergences I’ve been looking for may appear; we have only one right now that may begin to manifest.