Now that the Fed is out of the way, we can await the news from the European Central Bank and then the China trade and tariff news on the weekend. What will we fret over next week?
What was so curious was that the small caps seemed to snub the Fed, as if they wanted no part of the rally. So they went from outperforming to underperforming. Just look at this chart of iShares Russell 2000 Index (IWM) relative to SPDR S&P 500 ETF Trust (SPY) , not only can it not get up and over that downtrend line, it can't even get over the early November high. I'm not even asking for a move over the September high -- well not yet at least. It's like every time the door opens, Russell refuses to step outside. Kind of like your dog in the dead of winter -- when he sits at the door wanting to go out, but when the door opens and it's freezing and snowing, he seems to lose interest.
But despite the small caps sitting it out, breadth was decent again. That makes six-straight days with positive breadth readings for the New York Stock Exchange. And, once again, breadth is leading since it made a higher high while the S&P hasn't done so, yet.
The McClellan Summation Index even ticked up. I would show it to you, but you'd need a NASA-powered magnifier to see it. Also, a down day for breadth on Thursday and it will go right back to the flat line. It really should be up a lot more by now.
I was asked to follow up on my view on bonds, the yield on the 10-year Treasury note, but, quite frankly, there is nothing new to say. I continue to think it is currently bound in a trading range with the 1.90% area at the high end. While I have drawn in that uptrend line that comes in at 1.65%, I think it could come to 1.50% and still be in the range. Until I see something that says it wants out of this range, that's all I see.
In addition, a follow up on gold was requested. I warmed up to gold about two weeks ago, and I think it is perhaps a few dollars higher now, so basically not much has happened. Using the exchange-traded fund SPDR Gold Trust (GLD) you can see the small uptrend line is still intact and the downtrend line is still looming overhead.
There is considerable resistance at $140 from the downtrend line, from all those prior lows in September and October. And we may as well throw in last week's highs, just shy of $140. Any move up and over $140 changes the picture. It still has resistance, but over $140 and we know it is eating through it, not being resisted by it.
