Money Flow for December Week 2

Further to my last weekly market update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Germany, France, and the PIIGS Indices
• Emerging Markets ETF (EEM), the BRIC Indices, and the BRIC ETF (BKF)
• Canada, Japan, Britain, Australia, and World Market Indices
• Commodity and Agriculture ETFs (DBC and DBA), Gold, Oil, Copper, and Silver
• 7 Major Currencies
• Ratio Charts comparing the SPX to other Major World Indices

Like last week, you won't see any commentary for individual groups, as I simply wanted to show, at a glance, three things:

1. where current price is relative to support/resistance levels
2. which groups money was flowing into and out of this past week
3. current relative strength/weakness of the SPX to other Major World Indices

in order to asses whether there was a common theme(s) going on here. In this regard, I've provided:

1. 6-Month thumbnail charts of each group
2. 1-Week percentage gained/lost graphs for each group
3. 2-Year ratio charts comparing the SPX to other Major World Indices

You can see from the 6-Month charts where current price is relative to resistance/support levels. Most of the U.S. Major Indices and Major Sectors experienced a pullback this past week, while most Major World Indices, essentially, based at/near their highs and are at either downtrend, horizontal, or moving average resistance. One notable exception is China's Shanghai Index with Friday's large rally...it is, however, trading at a new horizontal resistance level. Gold, Silver, and Agriculture continued down, while there was a slight uptick in Oil and Copper. Money flowed out of the U.S. $ and the Japanese Yen. This is the first common theme, at the moment.

The above is confirmed on the percentage gained/lost graphs. In the U.S. markets, the general theme was selling, except in the Dow Transports Index and the Materials Sector. This is the second common theme, at the moment.

The above is also confirmed on the 2-Year ratio charts comparing the SPX to other Major World Indices. You can see that the SPX has been trending downward, generally, from the middle of this year and is either at/near some form of horizontal, downtrend, or moving average support level, but on accelerating bearish downward RSI below the 50.00 bull/bear level. This is the third common theme, at the moment.

Summary

To summarize, sentiment is negative and relative weakness is accelerating in the U.S. Major Market Indices and Sectors compared with other Major World Indices. It's the theme to watch going forward into next week and beyond.

Markets seem to have shrugged off the Fed's latest monetary stimulus announcement from earlier this week and are waiting for a resolution of the "Fiscal Cliff" issue, as its end-of-year deadline approaches. At the moment, and, generally-speaking, there seems to be no confidence in, nor new money being placed in the U.S. markets or the U.S. $...rather, money is coming out as profits are being taken.

Also, you can read more about my three "canaries" that I'm watching over the next weeks/months as a gauge of the effectiveness of the Fed's latest stimulus program in my post of December 12th.

I'm also watching four ratio charts of the SPX:VIX, RUT:RVX, NDX:VXN, and AAPL:NDX over the next few days/weeks, in order to measure relative strength, as detailed in my other post on December 12th.

 

6 Major Indices

9 Major Sectors

Germany, France, and the PIIGS Indices

 

Emerging Markets ETF (EEM), the BRIC Indices, and the BRIC ETF (BKF)

Canada, Japan, Britain, Australia, and World Market Indices

 

Commodity and Agriculture ETFs (DBC and DBA), Gold, Oil, Copper, and Silver

 

7 Major Currencies

 

Ratio Charts comparing the SPX to other Major World Indices

 

Furthermore, we may see further buying on the beaten-down high-beta stocks, as has continued this past week, in some of the Social Media stocks and RIMM, (as shown on the 1-Week percentage gained/lost graph below), as fund managers attempt to top up their yearly portfolio gains before the end of the year. I'll be looking for any parabolic rise and climax on high volumes on stocks such as these as a precursor to a potential major market trend reversal. If this type of stock continues to explode higher in the near-term versus value stocks, I'll also be warned of potential Q4 earnings weakness (markets favouring beta-movers versus actual value).

Conclusions

In conclusion, we may continue to see volatile intraday swings:

1. until the "Fiscal Cliff" issue is settled,
2. during the upcoming Quadruple-Witching OPEX week, and
3. until the end of the year as fund managers re-organize their portfolios for 2012 year-end and Q4.

Enjoy your weekend and good luck next week!