Continuing to See Complacency

 | Jan 17, 2013 | 7:18 AM EST
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Since the market hasn't budged in four trading days the statistics haven't changed much.

I continue to see complacency in the market, with Wednesday's showing up in the form of the Investors Intelligence readings of 53% bulls, something we haven't seen since mid-September.

What I do find curious is that the number of stocks making new highs continues to contract, not expand. The NYSE had 165 new highs on Wednesday's higher high in the S&P. Keep in mind the first day of the new year we had 454 new highs. Last week we had just shy of 300. They may not want to sell the market, but considering all that bullishness out there the buying is rather selective.

Just over a week ago I showed the chart of corn, having drawn in the red line on the chart and discussing the potential for an oversold bounce. OK, it's been more than an oversold bounce, it's been a regular rally. I do find it curious that when I showed the chart corn was trading around $6.80 and I received exactly one question on it. In the past two days my inbox is now full of folks interested in corn now that it is at $7.25.

I like that it crossed over the black line and is consolidating over the line. I would like to see it consolidate some more and do some backing and filling. If it can do that then I think it can get up to $7.50, but at this point there is too much resistance beyond $7.50 for me to think it can do more than $7.50.

I was also asked to update my view on the U.S. dollar. I think it is trying to carve out a head-and-shoulders bottom, although I think the operative word is "try," since I must admit the euro seems to have little interest in going down much on all those negative euro comments out in the last few days. But if the Dollar Index can stay over 79.50 it ought to make a try up there at 81-ish. I will note if it breaks 79.50 then I think that hard support at 79 is likely to give way, so it would turn me bearish. But for now I lean in the positive camp for the buck.

I was also asked to update my view on gold, which hasn't changed much in the last week. You might recall I had a downside target of $1625, which it got to, and then I had a target of $1675, which it got to. It how sits in this $1675 area, struggling to break out. I'd like to see it get to $1700 and then pull back to retest $1650, but so far it has refused to push through this resistance. For the most part, I lean more positive than negative on gold at this point and that is the first time I can say that since the highs last September.

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