Further to my last weekly market update, here is a summary of where money flow ended for Week 5 of March 2012.
The Weekly charts below of YM, ES, NQ & TF show that YM, ES & NQ made a higher close and TF made a slightly lower close than the prior week. The uptrending channel is still holding as support and direction for the Weekly timeframe…although the TF closed on the lower channel…one to watch, again, for potential developing weakness.
I'll reiterate what I said in my last weekly market update…if the Major Indices are going to continue a convincing rally from here, it will be important for the Russell 2000 to break (convincingly) and hold above its February highs to provide added fuel. A failed breakout could lead to the onset of weakness, not only in this index, but also in the others.
The 1st quarter is now officially over and what a quarter it has been so far! The stock market rise which started with the Santa Rally did not look back and kept rising. The bear camp including many famous names have been obliterated and ridiculed. But it was a rally which nobody loved. The bears hate it because it destroyed them. Bulls hate it because they were not fully prepared for it and could not get enough of it. Those on the sideline hate it because they never got a chance to join it after a pull back. Because there was no pull-back.
While I correctly predicted the start of the rally, I jumped down too early based on Technical Analysis while my cycle analysis and fund flow analysis were still positive. But in the Fed manipulated world no TA or fancy chart works. To get an idea of how the stock market really works just take a look at the following chart.
Further to my post of January 27th, I'll offer the following Quarterly timeframe charts of the Dow 30, S&P 500, Nasdaq 100, and Russell 2000 Indices. There were impressive gains for this year's first quarter…the Dow's range was 1,067.89, the S&P 500's range was 160.29, the Nasdaq's range was 486.44, and the Russell's range was 111.14…they added to the impressive gains made in 2011 Q4…and all were made with barely a pullback on the current candle. They are, however, now trading at major resistance levels.
It's difficult to imagine that Q2 will duplicate this feat without a pullback, but stranger things have happened! I am, however, mindful of my recent posts, so strong vigilance to be on the lookout for developing weakness is the order of the day/next quarter!
So, as I referenced in my post above, I can report that the first layer of the chocolate cake has been whipped up and baked to perfection…we'll see if the rest of the layers and embellishments get added to complete the cake in order to be ready for serving by this Christmas…it all depends on how hungry the bulls are and whether anything distracts them from this delectable tea party…it's not a cheap cake, so the bulls (a ton of them) will have to open their wallets wide from this point on without reservation/hesitation!