No Entry Points

Maybe it's the Santa rally; the seasonality. Maybe it's new money coming into the market from fund managers. Whatever the reason, the first week of January was bullish. It is said, so goes January, so goes the rest of the year.

Maybe. But I'm seeing complacency and that's not a good thing. Still, a market can remain overbought for longer than many expect and the Seven Sentinels are still on a buy. If I had an extra IFT last month, I'd be in the market too. But I didn't have an extra IFT so I've been looking for a decent entry point this first week of January. And as far as I'm concerned, there has been none. With the limited number of IFTs we have I'm very mindful that I need to make them count as much as possible. The charts have looked toppy for the most part, so I wait.

I thought today's data points would drive the market action today, but the market didn't seem to care too much about the unexpected decline in payrolls.

December nonfarm payrolls dropped 85,000, worse than then the expected unchanged reading. The unemployment rate held at 10.0%, which was inline with expectations.

A big disappointment in the report was the number of long-term unemployed (jobless for 27 weeks or longer) continued to trend up. For those workers counted officially as being unemployed, 4 in 10 unemployed workers have been jobless for 27 weeks or longer versus 2 in 10 a year ago.

December ISM Index rose (55.9 versus 54.3 consensus), and construction spending just missed estimates (-0.6% versus -0.5% consensus).

So no big move today. But next week is OPEX, and while OPEX week is generally positive, OPEX in January has tended to be negative for the market in most years this past decade. I have to say that today's last hour gains were suspicious to say the least. Since Monday's have been overwhelmingly positive for months now, I'm thinking a lot of traders are following that trend.

Yes, the Seven Sentinels system is on a buy, but forgive me for seeing the proverbial fly in the ointment here. Today's charts:



All four are back on a buy here, but they can roll over without too much selling pressure. Of course we haven't been seeing much of that lately, but just so you know.



TRIN is a sell, TRINQ is buy and BPCOMPQ continues to trend upward in buy territory.

The Seven Sentinels remains on a buy with 6 of 7 signals in buy territory. It's been three weeks now since the last buy signal, which is an extended period of time given how long they tended to last for much of last year. But it's a new year and market character may be changing. So if you're still in the market, you're loving the action and happy to see the SS continue to validate your position.

We had some changes to the Top 15 for Monday's trading action, but I'm going to save that for a post this weekend, along with the Top 50. So I'll see you then.

 

[Birchtree]

I think we have a powerful move on the way to the upside. We just completed a two month base which is the first base in over two years - a market that consolidates sideways is not a market anyone should miss - never mind take short. The bears are going to pay a dear price next week. The transports at 4222.26 is a 15 month high with more gains to build. A few words from Bob Doll before I close: "If you know how the markets work, perception is often more powerful than reality. That is, when the market perceives that an economic recovery is just graduating to that elusive growth stage, that's when stocks make their moves. And when that growth reality sinks in, it's usually too late to catch the rampaging bull." I hope you find your entry point.

 

[JTH]

My dear friend you have a system and you are not following it, or should I say you are interpreting it when it's already given you the answer you didn't like. I seem to remember you harping on yourself for not following the 7S a while back. I dare say it is right more often then we are and sometimes we just have to free our minds from the matrix of what we know to be true. Sometimes I think you just know too much for your own good, just take the blue pill...

 

[coolhand]

My dear friend you have a system and you are not following it, or should I say you are interpreting it when it's already given you the answer you didn't like. I seem to remember you harping on yourself for not following the 7S a while back. I dare say it is right more often then we are and sometimes we just have to free our minds from the matrix of what we know to be true. Sometimes I think you just know too much for your own good, just take the blue pill...

If one is going to follow the SS, then it needs to be followed as close to the initiated signals as possible. Since I was not able to act on the buy signal until 2.5 weeks after the fact, then I had to use other methodology to ascertain whether I still had a good entry point or not. I decided I did not for numerous reasons. Yes it was and still is a buy signal, but it's a buy signal with about a 4% gain behind it. We are overbought and I have numerous reasons to believe I need to be patient now. Mark Young gave a senticator sell on the MB this morning, and it had a 90% accuracy rate. Today was the 10% of time it did not play out. It was not to be faded. But such is the matrix. I'm thinking Monday is going to be very interesting, but I'm not holding my breath. We'll see.

My Doctor's got me on enough pills now as it is.

 

[JTH]

When the CNBC folks start pointing out Bullish Mondays, it makes me wonder if Monday is when the selloff will begin. I know how you feel though, it sucks when you know the market should pullback, but you aren't given the opportunity.