Are market players waiting around for Congress to resolve the fiscal cliff, or for Friday's employment number, before they do anything? I ask because it sure felt like no one was interested in trading much Thursday. In fact, the market was so dull that I kept waiting for someone to tweet, "Never short a dull market," but the phrase never appeared in my Twitter stream.
As far as statistics are concerned, we have both good and bad news. On the positive side, once again, was Nasdaq breadth as measured by volume -- i.e., upside minus downside volume. This indicator has now eked out a higher high vs. last week, while the index itself is at a lower high.
On the negative side of the ledger, the Russell 2000 once again refused to play along, underperforming the S&P 500 and the Nasdaq. That meant another rise in the ratios of the Russell to both of the other indices. Since mid-November this indicator has been heading lower as the Russell has outperformed. In the past two days it has been a laggard relative to its bigger-capitalized siblings. If you are on the bullish side of the market, you want to see the small-cap names get back in gear.
Away from that, when the major indices first reached resistance a week ago, I drew in a line showing the resistance. When the market got overbought, that line remained in place. The pullback has been relatively mild, and saw the development of the right shoulder in a potential head-and-shoulders bottom. If the market rallies some more, I expect many will begin to see this pattern.
I have picked on Nasdaq as my example, since here the head-and-shoulders formation is quite clear and almost symmetrical. What I would like to point out is that this 3025 area is not only the neckline, but also the underside of a broken uptrend line and downtrend line. It will not be easy to get through there, and I am not yet convinced the index is set up to do so, but it surely shows us the level to which we must pay attention.
Turning again to European exchanges, which I've been reviewing all week, here is the final installment: the U.K.'s FTSE 100. This index has been toying with this 5900-to-5925 zone for a week now -- or, shall we say, for three months. There isn't much difference here from what we're seeing on the Paris Cac and the German Dax, which we looked at earlier this week. The European markets have all outperformed that of the U.S., as well as bourses in the emerging markets. But, while they don't want to decline, they are spending a lot of time spinning their wheels at the old highs, almost as if there is not enough "oomph" left to push them over the hump.
Finally, I'll fulfill one more request and take a look at the chart of silver. If you'll recall, I already noted the other day that I thought gold should bounce off the support lines on its chart. It has done so -- albeit rather lethargically so far.
In any case, it's been quite some time since we checked on silver, and I don't see much to note here, other than the fact that the price has held above the uptrend line. I suppose the question is whether silver appears as though it can rally, and the answer is yes, but I don't think it will climb above $34 per ounce. To me it looks as though silver is trapped between $32 and $34. If it rallied poorly or just chugged around, it might even start to look as though it wanted to roll over and break $32. So the key is whether the metal can rally off this support area -- and so far it has not done so.