Weekly TimeCycles, OptionFlows & Exhaustion highlights: SPIKE or No SPIKE...?

Relative Strength and Breadth Indicators are all showing a fading chararcter where less and less stocks participate. Even though we saw a good amount of catch up last week (...now that we have an 'all clear' signal from the US Employment market...if you believe the seasonal adjustments...), the overall picture is still week, driven by hot money and quick trades.

Last week we stressed that we needed more upside action to see a sufficient upside exhaustion. We have come much closer to that stage......

 Institutional hot/ 'must have' holdings show in aggregate that the hot money is getting tired and trigger happy in a way that it will not need much of a rollover to trigger the stops.

 A look at the Banks Optionflows also show how the hot money has been playing and that the Bnaks are starting to look heavy.

 Gold got hit hard on Friday or better the Hot Money took profits. This could be the beginning of a serious correction or not!
When a market should correct and doesn't - like most markets over the last weeks -  then we expect more upside which shows in the development of negative divergences in the Indicators. We see this in Gold, Prec. Metals, Institutional Money, Small Caps .......

Last week we observed all these FibTime clusters around the beginning of Feb. We experienced some power surges but no top yet which proves our theme of 'a market that does NOT want to correct' yet.

This week the next timing target seems to be around mid Feb.

Let's see if Mr Market ignores those clusters as well or whether we see some weakness.

All all is completely aligned with King Dollar which in itsself  is spooky and shows how liquidity driven these markets are.

Relative Strength

Nasdaq & Semiconductor stocks were extremely strong during the bounce.

As long as we find the Banks and the BRIC stocks on the right side of the chart and the safehavens and marterials on the left side, we have to assume an impaired and unhealthy market structure .

The week of the SAFEHAVENS

Correlations converge when the BEAR comes...

Comeback Kids that enjoyed the Greek Sun

A good 2% up week for the SPYDER and our beta friendly TECHs (thanks to Apple) and the Energy/Materials Complex enjoyed the sun.

More interesting though are the comback kids like SLV, USO and the Banks that really starting building up some hope.

Try to interpret the comeback kids and you would come up with a story like this.....

"...once upon a time when Aunt Angie decided to assume responsibility for her brother in law, the one with the gambling habit, all bookies began to smile and all speculators to doubt that she actually has the money....."

Classical Liquidation Pattern

They all went down together....

...and also moved closer together.

Forget about fundamentals, this is called LIQUIDATION!

The former Cheerleaders lead the Market in tighter lockstep down

Our Correlation Analysis shows some remarkable results, namely that Tech, Banks, Materials and the Euro intensify their lockstep relationship in a weak market. There is no diversification just liquidity that drives this QE beast.

The flight out of BETA also shows up in the growing inverse relationship to the Healthcare Sector and Staples or defensive Sectors.

the Relative Strength analysis shows the same, that the former leaders lead the Market down and that there is no absolute hiding in a liquidity driven market, neither in Healthcare nor in Staples.

Market shows underlying weakness

• Defensive Sectors lead
• we just saw a quick ramp up into the OPEX
• Banks struggles
• Prec. Metals are working off their Exhaustions

Relative Strength

Winners:

Healthcare, Staples

Loosers:

Materials, Prec. Metals, Banks

Materials, Oil, Prec. Metal were the ultimate leaders and now they are lagging ....which are signs of a topping market