“When you see a fork in the road, take it”-Yogi Bera
So how will the market go this week? Will more silliness from Greece knock the underpinnings out of the tape? How about some home grown political uncertainty? The market was thinking Romney, now Newt is all the rage. The market hates uncertainty, especially of the political sort. The market wants Obama out and Romney was “the guy” to do it, so will a Gingrich lead take some starch out of this rally? I don’t care if you are writing in Ralph Nader or Casey Anthony for POTUS, that is a fact.
The euro is still more shorted than $SHLD or $NFLX were a few weeks ago. Is that rally getting long in the tooth or do we see a technical thrust higher for weeks to come? The market would love that, as the dollar will most certainly retreat further and send stocks even higher.
Are we overbought? Tom DeMark thinks so. He is only the guy that has called almost every top and bottom (so close its scary) in recent history. He thinks we top Monday or Tuesday. $AAPL also reports earnings after the close Tuesday.
It looks like Europe will go ahead with some sanctions on Iran next week. The Mideast, like Europe, never fails to surprise us, so that will be interesting going forward.
This tape seems tired to me. Volume is still uninspiring. Hedgies lost client money last year and they lie awake at night ready to piggy back any trend or trend change. They will have no aversion to selling quickly if we top and go lower. They are petrified of under performing again and will do what is necessary to protect any profit. The S&P was flat last year and many of them still underperformed. Their mood changes can be both a blessing and a curse depending on what side you are on.
Earnings are still just warming up, even though the major banks are out of the way. $GOOG was a train wreck, but $IBM, $MSFT and $INTC were decent. All in though, earnings have been a disappointment for the fourth quarter. I do think that $AAPL will blow it out of the water on Tuesday.
Cliche Time…’Market’s can stay over bought” . They can also get decapitated when you least expect it. I always say charts look like Picasso’s until they don’t and right now many look that way. I will never pick a top, but I can definitely be ready for one. Right now I know exactly what I am going to do if this tape goes into the wood chipper.
Good luck next week. If you would like to see what I will be doing for my subscribers, you can become a Premium Member here. If you would like to request performance, email: email@example.com