Here we are again.
Back on Jan 11th, we pegged 1,050 on the Russell as the most critical line in the markets and failing that turned us bearish and turning bearish made us a ton of money last month. That was also a Beige Book week and we were concerned about upcoming reports for the week which were: "Retail Sales, PPI, Industrial Production, Empire State Manufacturing, Consumer Sentiment and Business Inventories." Sound Familiar? Yep, it's the same stuff that was lousy this week but it has less impact now because we already had our shock.
On Thursday, Jan 14th, although we predicted DOOM!, we also predicted the Dow would bottom around 16,000 (off by 250) and that we'd bounce back to 16,700, which was pretty much the right price as we analyzed and evaluated each Dow component. In that post, I laid out the game plan we would follow for the next 6 weeks, which led us to a $200,000+ gain (33%) in our two main tracking portfolios.
We flipped bullish right at the bottom and now we're back to being uncertain at Russell 1,050, S&P 1,978, Dow 16,865 and Nasdaq 4,335 vs 1,046, 1,922, 16,346 and 4,271 back on 1/11. So clearly, all the other indexes have recovered much stronger than the Russell so either we see the Russell begin to catch up or, once again, it will become a drag that likely signals an overall pullback.
Today's big data point will be Oil Inventories at 10:30 but expectations are already low after the API showed a 9Mb build last night. Any net under 5Mb will be bullish for oil (now $33.75) but $35 has been a good shorting line for us so far (/CL). This afternoon we get a look at the Fed's Beige Book and it's hard to imagine that won't be depressing after our PMI and ISM numbers (auto sales were light too) and, this morning there was a 4.8% drop in Mortgage Applications – also a bad sign.
We will be doing a Live Trading Webinar for our Members at 1pm so we'll be live when the Beige Book is released at 2pm so get ready for some fun