Technical Picture - SPX Target Reached

Our SPX target - 1344 was reached Friday on positive jobs data. The Fibonacci extension remains in play until it fails. We'll stretch it to encompass any new highs and look for a pullback to the ambush zone. If the extension fails in the ambush zone, we'll look for a deeper pullback - 50% retracement from Feb. high to Dec. low.

In the meantime, I'm monitoring the 15 min SPY chart for any negative divergence of the RSI to new highs. This often foreshadows a pullback. So far, there's nothing to indicate the uptrend is in jeopardy. Gap support held on the first test.

BIIB flagging within a Fib. extension after coiling and ripping out of its base.

Technical Picture - Small Caps Outperform (January Effect)

Small caps are pacing the way higher. The 23.6% Fibonacci extension was reached and exceeded yesterday.

The chart below highlights the January effect with small caps far outperforming large cap broader markets in the month of January.


Last week, we said we were looking for a small correction to SPX 1300. A good place to add to long positions. Now, we need to see follow through to our target at 1344. Also note the golden cross of the 50/200 SMAs.

Divergence between light crude and the SPX is a bit of a red flag. A stronger market due to improving economy should lead to higher demand for oil. Since the beginning of January oil is in decline. What's up with that?