1500  First time closing over 1500 for the S&P 500 since 2007 and some very latecomers-to-the-party are getting bullish. Not so much so that suggests a top in the market as it is bullish. However so many charts are extended and a rest and consolidation would really help to set up charts for better entries. When stocks run up day after day they have no time for backing and filling so build no real levels of support. One prefers to see support levels as they provide convenient places to set your stops. A pullback then would be desired as it also allows  investors to to see the volume on a sell off compared to the strength of the rally. A low volume decline would be quite bullish for a move back up to the highs and break out higher. This is the last trading week of the month so we may see some window dressing later in the week.

Before we get to the  charts - a  music video.  

The Feather Sound is a folk-pop group from Illinois. They formed last autumn with some former  members of the band The April Year from the Chicago area.  This song is Shove. "When push comes to shove will I go off that cliff with you? Well, I don't know." It starts actually with a rather feathery sound with simple guitar accompaniment. By the second minute the guitar has a more rock sound and drums join in and by the 2.5 minute mark the guitar is for sure rocking its strums. The levels are compressed in the recorded version but I imagine in a club that it gets much stronger. tweet them with your support  @TheFeatherSound and check their BandCamp page  or facebook

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis.

Bullish - 52.3% Neutral- 23.4%  Bearish- 24.3%

After falling by much more than expected in the previous week, first-time claims for U.S. unemployment benefits unexpectedly fell to a new five-year low in the week ended January 19th, according to a report released by the Labor Department on Thursday. The report showed that initial jobless claims dipped to 330,000, a decrease of 5,000 from the previous week's unrevised figure of 335,000. The drop surprised economists, who had expected jobless claims to climb to 355,000.  graphs -  RTTNews

New home sales rose 4.4 percent month-over-month to a seasonally adjusted annual rate of 377,000 in November. Annually, sales were up 15.3 percent. New home sales rose in the South and the Northeast, while sales declined in the West and the Midwest. New home inventories as measured by the months of supply fell to 4.7 months, while the median sales price of a new home rose 14.9 percent year-over-year to $246,200.

The index of U.S. leading indicators rose in December by the most in three months, signaling stronger housing and job markets will help the world’s largest economy make more progress in the first half of 2013. The Conference Board’s gauge of the outlook for the next three to six months increased 0.5 percent after no change in November.

The Dow just made another post-financial crisis rally high. To provide some further perspective to the current Dow rally, all major market rallies of the last 112 years are plotted on today's chart. Each dot represents a major stock market rally as measured by the Dow with the majority of rallies referred to by a label which states the year in which the rally began. For today's chart, a rally is being defined as an advance that follows a 30% decline (i.e. a major bear market). As today's chart illustrates, the Dow has begun a major rally 13 times over the past 112 years which equates to an average of one rally every 8.6 years. It is also interesting to note that the duration and magnitude of each rally correlated fairly well with the linear regression line (gray upward sloping line). As it stands right now, the current Dow rally that began in March 2009 (blue dot labeled you are here) would be classified as well below average in both duration and magnitude. However, when compared to the most recent post-major bear market rally (i.e. the rally that began in 2002), the current rally has already surpassed it in magnitude and required less time to do so.

First This past week's  sectors.

This past week's indices  -   

The Dow closed at a multi-year high and only 2% below its all-time high while the S&P 500 is about 5% below its all-time high. The NASDAQ is below its high of last year, while the Russell of course is already up at an all-time high. The close on all of these  is  at or close to the high for the month. Oil is also near the high of the month and at resistance shown on the chart while gold closed just slightly under Its Ctr., Bollinger band.  

It has been a very unusual month as we see on the 60 min. chart. There have been almost no pullbacks to  the bottom Bollinger band since January 8 as the candles just kept pushing the top band higher. For the most part it was pulling back only to the ctr. Bollinger bands, at least for the Dow. The NASDAQ has had a worse time of it with its choppiness going back and forth between the upper and lower and back again. 

A 30 year look at the Dow as it heads towards its all-time high. Note how the Fibonacci 50% retracement line was in play during five separate years and in four of those the line did not yet exist. 

The weekly Dow shows the breakout this week, though there was a decline in volume below the previous couple of weeks as the market was closed on Monday.. Longer-term we note that RSI is only at 65 and we would not  reach really over bought levels until above 70. 

Short term however, we are quite overbought, having moved up six days in a row and only 110 points below this 161.8% projection based on the breakout above the December highs. 

This projection level for the Dow we have shown for several weeks based on the low during the autumn dip with a 127.2% projection at 14,048. There are very good odds that we will see that level. 

For the Dow futures for short term  traders we posted this chart of a very small range on a 60 min. chart giving these two projection levels. On Friday we did reach this 127.2% and for the short term, if we happen to move yet again on Monday or Tuesday the 161.8% would give further resistance at 13,873. 

The Dow Jones utility average has been doing quite well and Friday had the largest volume it has seen this year and it is approaching a downtrend line and a bit above that a horizontal resistance area. As it meets those points, if it does, watch RSI because that may be overbought at the same time. 

For four weeks in a row the transportation average has done very well and this week ran again 3% as RSI moved over 70. This is at least in the short term overbought territory. 

The NASDAQ has been floundering though the NASDAQ summation index remains on a buy as you would expect. 

The moving average of  new 52 week highs of the NASDAQ has shot up markedly since the November low and is greatly exceeding the movement of the NASDAQ 100 showed in red. 

The NASDAQ gained only $15 this week as it rides the trendline higher. 

As the NASDAQ has closed again over the 127.2% line there is a better than even odds that it will test the highs from last year and probably exceed them to move to the 161.8% projection at 3218. 

The 60 min. NASDAQ chart shows it not far from the horizontal resistance just overhead.  It is been inside this wide parallel channel since last November. 

The NASDAQ 100 ETF gained a bit more this week and has been long since the start of the year. 

The NASDAQ 100 futures ran above the 127.2% line then came back down but remained above the breakout level which is moderately bullish. 

We added Netflix to the watch list for Thursday morning however it gapped up. The gap could still have been traded either as it tested that gap on the morning pullback or on its break out near the close at about $149.The follow-through the following day was significant. It is now quite short term overbought and if it did move one more day the 50% retracement level would certainly be in area of interest for short term shorts. 

AMZN ran to and above its Fibonacci 127.2% projection level which is based on the dip in the latter part of 2011. It also ran above this parallel channel top trendline, which is also breached during the highs of 2011. If it could pullback in in maintain the 127.2% it could over time run to the 161.8% at 297. That 127.2% could be used as a short term stop and of course the 247 level also has good significance.  

Just noting that BIDU had run up to this parallel channel trendline, having broken above it a little bit, and has pullback into what may be a bullish flag. It has been worthwhile watching for a reemergence of it back over about the $111 area especially if volume increases. 

AAPL with its drop this week slightly exceeded the shorter-term trendline we have been suggesting and on Friday it came down to the longer 10 year trendline as RSI finally on the weekly chart dipped below 30 and the Williams indicator closed within one point of 80. In 2008 RSI went even lower before the bounce started really moving and may do so again this time. If it does drop below this trendline it is important that it not linger though it could of course touch the 200 week EMA at 388. We would guess that enough people are watching this trendline that they will try and give it at least a bounce as buying comes in at this level. I don't think we will have a V shaped recovery, though a bounce could take it back up to the 50 week EMA at 544 pretty easily. 

On this shorter-term chart based on the leg shown starting at $363, this retracement from the highs took it down on Friday to the 78.6% Fibonacci retracement level. Note also that the 127.2% projection level we had plotted was at $450. 

You know of course that small caps have been greatly leading the market since mid December and that speculative issues have presented some rather wild trading opportunities. As we mentioned last week, the 3-D printing has been very hot for quite some time and this OTC company with its human tissue printing technology has had a couple spectacular runs last year and this. The company is not doing enough real business now to support these prices, but there has been enough future speculation to make it at least a short term trading vehicle. The latest move then at the breakout above $4 took it in four days to its peak way above the top Bollinger bands at $6.35. As that day was again a gap up open after a 50% move it was very normal for it to sell off drastically back down to that breakout level. There you see it became a trader again as it ran back up Thursday and Friday. At this point it could go either way but it obviously has to hold that $3.80 level for longs to remain interested.. 

We are showing this because it shows how we are in the phase of the market that we go through sometimes at least once a year where some speculative stocks along with others can run rather wild. If you like to trade things such as this it is good to watch for pullbacks to known support levels as  then you can set stops very close to buy points. In this case you see the drop from the highs was coming down towards the breakout line which happened to also be the 61.8% Fibonacci retracement. Those two combined made it a very logical entry with a close stop and it ran up to the 38.2% retracement almost 1 dollar for about a 26% maximum gain. 

This is the chart we were looking at on our live streaming charts page as many in the chat room have been trading this stock during the last year. 

Another stock just to demonstrate the wild moves in sectors of interest. This company creates software used in 3-D printing technology and as is quite typical, when a sector gets hot, traders look to all companies in the space to see what has not run-up to much yet. Some  chat room participants have also been trading in this space. Over the years we have seen this in many areas such as bird flu which was a very hot sector and before that we had nanotechnology and even some stocks that had nano in their name who had nothing to do with the sector, doubled or tripled in price. Anyway just pointing out some stocks that rapidly became very overbought.  

With the bullishness in the market and the Congress putting off important decisions until later, worry is reduced and the VIX closed down under 13. 

The semiconductor index up an additional 1% this week getting close to the downtrend line at 420 

For quick reference two longer-term mechanical charts, first the bullish percent index  went long the S&P 500 the last week of November. 

Our lazy chart had a dip to the sell side and then a long when it moved back over 1430. So it has done very well in this latest leg. 

This is actually the third week since the breakout above the horizontal resistance on this weekly S&P 500 and note, as with the Dow, lower volume this week due to the holiday on Monday.. 

The daily S&P 500 chart shows how boring it it has become as the index is basically up every day area. Do note, however that RSI is back above 70 and though it can stay there for some time it does wave its caution flag for at least a small correction.. 

Longer-term however the chances are higher of at least touching the 127.2% now only nine points higher. In time the chart also looks promising that we will see the 161.8% above 1550. 

The 60 min. chart shows the price hanging around this upper trendline of this almost parallel channel. 

The 15 min. chart shows the move above this top trendline then a decline to test it from above and then the move higher. This now could remain short term support with resistance at 161.8% projection at 1509. This is based from the move off the low at the end of December. 

For shorter-term trading watch our 15 min. chart of the S&P 500. Live on our public page as a crossover of the 13 and 34 period EMA's would drop it back to a suggested sell. 

Just showing the SPY short term inside its own parallel channel hugging the top line. 

In this view of the S&P 500 futures we show a short term parallel channel partly within a longer-term one. These shorter timeframe channels have greater or lesser significance depending on your trading timeframe but charting them gives you levels to watch for opportunities that often develop. 

In its standalone version here the Russell 2000  monthly showing that very strong 6.5% move so far in January  clearly  broke out above its all-time highs. 

On the daily chart we had projected the Fibonacci level 161.8% at 907 and it came within two points on Friday. The histogram has been going lower and RSI is quite overbought at 77 so we would expect a pullback shortly. Still on this chart from the November low to the previous September high. We have an additional 161.8% projection at $932. 

This chart corresponds to the shorter timeframe Fibonacci level and note as we have been showing for several weeks, that if leg 3 were to be the same length as leg one, we would reach the 161.8% at 907 near the top parallel channel line. It is pretty clear why we appreciate technical analysis. Note that RSI is now very high at 74. 

barely

The 60 min. chart the dual moving averages are keeping pace so you don't want to hold it if it drops below so watch them for a crossover. 

And the black version of that chart with the 60 point move from the crossover buy, though the redline is now not showing on the chart. 

The 3-X  ETF for the Russell 2000 has a 161.8% at the top parallel channel trendline not far overhead at about $78. 

We have no technicals plotted for the Value Line just show its big the advance from the mid November lows and this current overbought condition. 

This 30 year bond price chart also shows a measured move and if leg three equals leg one we will see price levels at 141. 

The banking sector is lagging - has been moving up but not by much and it has some small amount of negative divergence on its RSI at the moment. if it does breakout it could eventually reach the 161.8% over $55. 

The retail sector added an additional 2% but closed off its high of the week and  likely needs some consolidation. 

The emerging markets ETF and the Dow Jones world index had been pretty well in line. Though this week the emerging market ETF was down 1%. though still above its breakout level. 

The Dow Jones world stock index added an additional .85% up now four weeks in a row and  nearing the 2011 highs. 

In the run-up from the 2009 lows to the mid-2011 highs, the Russian trading system was outperforming the US markets. At that point they began to drop and the US markets outperformed the Russian. At the moment the Russian markets have been moving again up 5.8% for the month and nearing the top trendline. 

After advancing big, then a 2-week rest, the London exchange jumped 2%  

The Shanghai stock exchange doing a little backing and filling this week, dropping 1%.

Our commodity tracking ETF remained over this horizontal resistance line but only by a whisker. 

Crude oil is up 4.7% this month as it nearing its downtrend line from its $147 high in 2008. That's when they were telling us that 200 dial dollar oil was just around the corner and it dropped to $33. 

On the weekly basis it was only consolidation for oil this week under horizontal resistance and the dotted line but over this short term up trendline. 

Natural gas gave back some of its gains from the previous week closing down 3%. 

On the natural gas futures we see the RSI dropped below 70 pretty near its high and the close on Friday was just above the 38.2% retracement level. 

We used to show the cloud chart for gold and for the S&P 500 and a few other indices but have not done so in a long time and noticed this one for gold in our stockcharts folder. You see the buy in November as it bounced at the bottom of the green cloud and its inability to break out of the resistance at the top near the end of November. Then the bottom of the cloud support held as it bounced up only to hit resistance at the red cloud for an additional sell. Note clearly resistance lies at the overhead cloud and buys could technically be originated upon entry  into them 

This daily gold chart shows some possible support when it touches the downtrend line from above. 

This a longer-term 10 year chart of gold shows a general trendline, which is close to the 50 months EMA at about 1400. That area would certainly be one to watch if we get there for some possible entries. Especially if RSI is still not at or not far below 50. 

The gold miners ETF lost 7% this week as its small multi-week bear flag played out and it dropped towards the trendline. 

This 60 min. GDX of shows a clear breakdown from this triangle at the correct point as you like breakouts or breakdowns between two thirds and three quarters of the way towards the apex of the triangle. We have not shown it on this chart but often the length of the move is the same from the break down point as the wide point of the triangle so you can plot that on your own charts 

Our mechanical chart started its main short in late September but had multiple whipsaws with the latest short entry near the beginning of the year. 

Silver lost about 2% this week closing back under the 50 week EMA. 

SLV may have dropped some but our mechanical chart has not yet changed positions so remains on a long. 

Palladium continued its move after last week's breakout and added an additional 2% this week. 

Copper, similar to last week, did hardly anything but does remain above the green downtrend line. 

For trading cotton there are ETF's such as this one, but note that the volume is almost non-existent. So  for trading cotton the more convenient way is to trade cotton futures. We are showing this chart because we said we would. In the October 1, 2012 newsletter we featured  "The Fabric of Our Lives®" advertising videos and also showed this chart and stated, "This may be worth watching over the coming months as it is near former support and often rises in the 4th quarter." It was at $46 so you can see that is had decent gains since then and is now back over the 50 week EMA.  

The euro added 1% this week and closed over the 200 week EMA for the first time since late in 2011. 

The euro futures have been bullish since early last summer and is now nearing the 50% retracement level where just above, there is additional resistance. 

The US dollar was relatively flat this week. 

A problem with this market is that most sectors are quite overbought and stocks have gone up so much this month that many have no nearby support for typical logical stops as even trendlines in many cases have not developed. Looking at dozens of sector charts show the same overbought condition but here are two that have not yet broken out in the near-term, but are at levels where a breakout is possible. These then are two groups you may want to watch for stocks in the sectors that may lead  to a breakout in this sector itself. The first one is the US food and beverage index consolidating right at possible breakout levels.  Here is a sector scanner

The second is the telecommunications equipment sector which also has had a decent increase in upside volume and could also breakout.  A sector scanner

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