Rotation Report: The facts

When you're in a position where it's hard for you to see all possibilities, you're more vulnerable to losses.  'I just can't see how' and 'I don't see how' are two often fade-able tag lines.  That's basically last week in a nutshell.  It was very easy to anchor opinions to last Friday's action.  I know I was guilty of it.  Enough with looking backward!  Onward and upward.

The best (only?) way to determine if a line of thinking needs changed is to review the facts.

For those who don't want to read the whole post:  Stocks can continue to go up, but the environment keeps getting tougher.  There are easier opportunities in other markets. 

I have to once again note this monster fibonacci extension level Andrew Nyquist mentioned at See It Market.  It could end up being important resistance worth noting.

The S&P 500 is trying to leave the 4% range.

All of a sudden the S&P 500 equal weight RS line has lost it's up trend-line.  A sign breadth is thinning.

The Nasdaq 100 broke another bull consolidation higher.  The measured move is 2% away.

The NYSE advance decline lines are still in line with price.  Volume breadth (bottom item) is starting to lag a tad.

Volatility continues to trade in an area of caution.

Consumers are winning

I mentioned consumer discretionary as a group that needed to pick it up last week.  Well, now it's leading the market.

It's worth noting breadth in the group is not confirming the highs

The travel index is working on a key resistance area.  I've recently written about some names in the group, and why I like the group, at See It Market. 

Restaurants had a monster close to the week, even with Chipotle dropping nearly 10% after earnings.  Incredible.

Bonds

TBT and TLT enter the week back-testing breakout levels.

High Yield Corporate Bonds continue to dance around the old high pivot level.  Yield is still precious in a ZIRP world filled the underfunded pensions.

Commodities

The CRB index continues work off very long term oversold conditions.

Cotton formed a bullish engulfing week here at the right side of it's base.  It's on my long watch list headed into the week.  

 Gas is testing the falling 40 week moving average.  Note it still hasn't regained more than half of it's 2014 decline.

The industrial metals group is trying like all hell to break back above a major pivot zone.  It'll be interesting to watch this long term area in the coming weeks and months.

Steel stocks are close to new year to date highs.  A break above 36 could lead to a 200 day moving average test.

Overseas

The world index continues to lead and outperform the US in 2015.

India has really shown meaningful weakness of late.

The Yen has jumped high on my macro trade list.  At this point, swing players are risking 1 point to make 4.  I guess the BoJ is in play later in the week.  That sets up the old 'but the BoJ is coming this week' excuse.  We all understand the whole QE-forever shtick is here to stay in Japan.

To recap, the stock market environment continues to be pretty tough for swing traders and investors.

• We're still in the thick of earnings season
• We've got this major Fibonacci level 1-2% away
• The market's lack of fear is seemingly coming to a boiling point
• Even in the best looking group, breadth is starting to fade.  

That doesn't mean the indices can't push higher.  It just seems like there are better opportunities in commodities, bonds and currencies and i'm in full blown less is more mode.

Trade 'em well!