Update: Week Ending January 25, 2014

This was a shortened week, and I know many long investors are thankful for that. After all, it was a tough week. As mentioned in last week's summary: "The long awaited consolidation came, but it was not clear whether it was a one-day affair - Monday the 13th - as the charts suggest, or it is still going on, as my oscillators suggest."

Well the jury came back with a preliminary decision, and it is that the consolidation continued and it is now official. Mind you, the separation of the three indices continued, with the DJIA being the more corrected than the S&P 500 or the NASDAQ Composite. This was true for most of the week, till more or less Friday. Further, the Composite dipped below last year's closing only on Friday. The S&P 500 was below by mid the week before, while the DJIA spent all of the month below last year's closing.

The oscillators are suggesting a consolidation at the same level of the second week of December. It is to be seen next week if we dip to the consolidation level of September and October. If we do exceed that, then it would be safe to start thinking in terms of the summer of 2012, as that was the deepest consolidation we got in the last 3-years beyond the correction of the summer of 2011.

From a fundamental point of view, in reality I cannot see anything new to cause radical change. The earnings reports, at least for my trading set, were not that bad. As a matter of fact, some of the issues that got an earnings boost are now trading below the pre-earnings level!

In essence, the Fed meeting this coming Tuesday and Wednesday is suddenly requiring extra attention. Yet, as this is the last meeting chaired by Dr. Bernanke, it is clear that expectations for anything radical should also be watered down. It is my view that this should have more impact than the busy schedule of earnings releases will, and mainly because of the watered down expectations. Hence, any indication of action by the "in limbo" Fed will be viewed to be more radical than it is really meant to be.

From a technical point of view - beyond the discussion above - one noteworthy aspect is that my trading set monitoring is showing worse bias than any of the consolidations mentioned above. A very alarming sign of a possible continuation of this current consolidation. As such, I would be weary of adding to positions until the picture becomes clearer. Yet, it is clear that industrials and retail are being punished badly, more so for retail.

As for particular stocks, Geron (GERN) continued its march upwards on Tuesday, even though no news were released. Dow Chemical (DOW) had the same unfortunate fate as Apple (AAPL) with some "activist investor" buying a negligible 2.5%, and yet feeling that they can dictate on the remaining 97.5% how to run this century+ company.

In noteworthy events, Verizon (VZ) and Intel (INTC) were both punished for doing business together. Another one of those awkward market moments! Think of it this way, if disposing of the Media assets by Intel was bad for INTC, then why is it not good for Verizon? I cannot make sense of it, and that is why I continue to trade technically.

On the retail front, Target (TGT) seems to have alienated half of South Korea, and it seems that whatever fallout from the Credit Card data piracy issue may go beyond the USA. I guess for retail, we will have to wait till the first week of February to get the earnings reports and hence have a feel for that segment of the market.

Treasuries and Gold were the biggest beneficiaries of the weekly action. The 5-year, 10-year, and 30-year bond rates all declined, and significantly so. This played well for mREITs in particular, as Annaly (NLY) is in my trading set. Gold (GLD) continued its attempt to stage a reversal, though in reality it did have a mixed week. Barring an unexpected event, I still think that both bond rates and gold will resume at one point, say within a month from now, the inevitable march upwards for rates and downwards for gold.

This unexpected event will not, in my view, be related to any market consolidation, unless of course it plays out as a significant market correction. It will actually be due to Fed action or statements. You see, for the life of me, I cannot discern where that highly publicized tapering played out!

Looking at the Fed balance sheet, I just cannot see it!

My regular table for the indices follows.

Index/ETF Symbol and Name		Daily 3-EMA-7	Weekly 3-EMA-7		Perceived Trend
SPX	S&P 500 Index	Neutral	Up		Negative
DJIA	Dow Jones Industrial Average	Neutral	Up		Negative
COMP	NASDAQ Composite Index	Up	Up		Negative
GLD	SPDR Gold Trust ETF	Up	Down		Positive
VIX	CBOE Volatility Index	Up	Neutral		Positive
FVX	CBOE 5 Year Treasury Note Yield Index	Neutral	Up		Negative
TNX	CBOE 10 Year Treasury Note Yield Index	Down	Up		Negative
TYX	CBOE 30 Year Treasury Bond Yield Index	Down	Neutral		Negative

As usual, the reminder is that the movement of the treasury yields is negatively correlated with the price of the underlying instrument.

As for my trading set, my short term "Perceived Trend Oscillator" stood at an almost oversold "neutral" -63%, which was the lowest reading for the whole week on Friday. This is in contrast of the "neutral" reading of -8% in the previous week.

The full trading set table is as follows.

Symbol and Company Name		Daily 3-EMA-7	Weekly 3-EMA-7		Perceived Trend		Is a Current Holding?
GERN	Geron Corporation	Up	Up		Positive		Yes
JPM	JPMorgan Chase & Co.	Down	Up		Negative		Yes
GS	The Goldman Sachs Group, Inc.	Down	Up		Negative
WFC	Wells Fargo & Co.	Up	Up		Negative
NLY	Annaly Capital Management, Inc.	Up	Down		Positive
MO	Altria Group, Inc.	Down	Up		Neutral		Yes
T	AT&T Inc.	Down	Down		Negative		Yes
VZ	Verizon Communications Inc.	Down	Down		Negative		Yes
GPS	The Gap, Inc.	Down	Down		Negative		Yes
ANF	Abercrombie and Fitch Co.	Up	Down		Neutral
JWN	Nordstrom, Inc.	Down	Neutral		Negative		Yes
TGT	Target Corporation	Down	Down		Negative		Yes
DIS	The Walt Disney Company	Neutral	UP		Negative
MCD	McDonald's Corp.	Down	Down		Negative		Yes
MDLZ	Mondelez International, Inc.	Neutral	Up		Negative
BA	The Boeing Company	Up	Up		Negative
LMT	Lockheed Martin Corporation	Up	Up		Negative
CAT	Caterpillar Inc.	Neutral	Up		Negative		Yes
DE	Deere & Company	Neutral	Up		Negative		Yes
EMR	Emerson Electric Co.	Down	Up		Negative		Yes
DOW	Dow Chemical Co.	Up	Up		Neutral		Yes
ADM	Archer, Daniels, Midland, Co.	Down	Up		Negative
MON	Monsanto, Co.	Down	Up		Negative
POT	Potash Corp. of Saskatchewan Inc.	Neutral	Neutral		Negative
PFE	Pfizer Inc.	Down	Up		Negative
BMY	Bristol-Myers Squibb Company	Neutral	Up		Negative
ABC	AmerisourceBergen Corporation	Down	Up		Negative		Yes
AAPL	Apple, Inc.	Neutral	Up		Positive		Yes
INTC	Intel Corporation	Neutral	Up		Negative		Yes
CSCO	Cisco Systems, Inc.	Up	Down		Neutral		Yes
HPQ	Hewlett-Packard Company	Up	Up		Neutral
CVX	Chevron Corporation	Down	Neutral		Negative
BP	BP plc	Up	Up		Negative
NGG	National Grid plc	Up	Up		Positive
NI	NiSource, Inc.	Up	Up		Neutral
WMB	Williams Companies, Inc.	Up	Up		Neutral
WM	Waste Management, Inc.	Down	Neutral		Negative		Yes
CNW	Con-way Inc.	Up	Neutral		Negative		Yes
CSX	CSX Corp.	Down	Up		Negative
NSC	Norfolk Southern Corp.	Up	Up		Negative		Yes

Disclosure: It is important that you understand and agree that all information provided in this newsletter rely on publicly available data and tools with no guarantees of quality or suitability for any purpose, and that I can be long or short in any of my trading-set equities, at any time, with or without regard to indicated trends and described analytics, and that I do not give buy or sell or any other financial recommendations, and that any and all actions based on this commentary are solely the responsibility of the reader.

Source: Update: Week Ending January 25, 2014

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