Weekend Commentary from Fallondpicks.com

Well, if Thursday belonged to the Bulls and Friday to the Bears, it was Wednesday which took the plaudits for the week. Wednesday’s huge intraday range failed to break by the weeks close, bar in the Russell 2000, so it is hard to draw any conclusions. The Russell 2000 is in trouble, losing the 50-day MA and near term support, to kick off a new downtrend. In terms of relative strength, Small caps now lag Tech and Large caps - a more bearish alignment {Tech Indices > Large caps > Small caps}. It is looking more likely we will see a test of the 200-day MA for the Russell 2000. The NASDAQ 100, the other struggling index, was able to hold the 20-day and 50-day MAs. The NASDAQ also holds these averages. The Dow closed on the 20-day MA and even though the S&P gave up support at this average and confirmed a break of its rising channel it still has the 50-day MA to look forward too.

Supporting tech market internals [$NASI, $NAA50 and $BPCOMPQ] haven't indicated any stall to the decline. The MACD, ultimate oscillator, short term stochastics [14,3] and now bullish trend strength (-DI > +DI) of the $BPCOMPQ all favor further weakness for an indicator which has wavered little since the start of December. The $NAA50 had given sparks of life but the indicator measuring the number of Nasdaq stocks over the 50-day MA made a bearish cross of its 5-day EMA which jeopardizes the break of resistance in the ultimate oscillator and the MACD trigger 'buy' signal (both weak bull signals - but each had the potential to turn into something better - this is looking less likely now). The $NASI (Nasdaq Summation index) has been in decline since November and bearish strength in this indicator has been increasing all the time. All three indicators favor a bigger decline in the parent NASDAQ/NASDAQ 100.

As for the Ticker Sense Blogger Sentiment Poll I remain bearish (which, I have been since September 23rd). Based on current action I am looking to April as a potential reaction bottom and a time to turn bullish - but time will tell. Keep the bulk of your reserves in cash and play small with any money you wish to expose to the market.

Newsletter update:

UTF hit its most recent stop after a decent run. The utility fund first featured as a Subscriber pick for May 25th and as a Breakout for June 30th and again for July 20th, September 1st, November 17th and December 13th. The Subscriber pick closed for a 25% gain and the Breakout plays for a 17% gain, 14% gain, 7% gain, 2% gain and a 2% loss. Subscriber pick BPT featured for October 19th and November 16th. The two plays closed for a flat gain and a 3% loss respectively. FMT gapped into its stop, ending the November 10th Subscriber pick for a 7% loss. NVD hit its stop after a promising start. The December 18th play closed for a 9% loss.

Fallond