The year started out much as it ended with a nice little buy signal, which developed on Friday the Jan. 29, which was the last trading day of the year but did not kick in until the first trading day of the year. There were several signals, but you can see how it developed on the Russell as we had a 35% retracement at a 1535 low. The party continues.
How high it goes, nobody knows. But in terms of the seasonal aspect January is the next possible point for consolidation, dare I say correction. I started looking at the potential for January as the big windows in October didn’t fire off and appear to have been an inversion propelling markets higher.
Is there anything that could stop these markets? I’m focused on a pair of issues that may or may not develop. First is the crude oil chart, which did find a high on Friday and is now at the 261-day window going back to the last important high on Jan. 3, 2017. Additionally, the Transports is officially on the clock through the middle of the month for a square out on a weekly chart.
This may or may not happen, but it is possible to lose oil and transportation stocks by the middle of the month. At this point its just a hypothesis. Should I just come here like everyone else and tell you smooth sailing ahead? It’s hard to argue with a runaway freight train but it needs to be taken one step at a time especially since we are still on a new buy signal from last week which is not hypothesis. But it’s the same kind of vibrational square outs which have materialized that created the buy signal which could kick over the milk in the next week.
Elsewhere, precious metals have slowed down but not reversed after an incredible leg up after another of my vibrational turns. At this point it does not look like a major reversal with gold right on the 61% retracement of the last leg down. You can look at it with the glass half full or empty. The 61% retracement can kill a move but on the other hand is a steep retracement to the prior leg suggesting there is an underlying strength to the new move. Right now, it looks like the glass is half full if not more.
The new week has started slowly. I already stated the Transports are on the clock for a bigger square out on a weekly chart which could take some time to play out. Right now, they are up 161 days from the May low last year. It’s still early with the Dow down about 50 points an hour into the week. The runaway freight train has taken care of every charge bears have made in recent memory. This could be what I’m looking for or perhaps the chart finds a better calculation.