The S&P 500 ended the year in new-high price territory while the situation under the market's surface remains somewhat murky. The index's rise has been accompanied by weak breadth, less than half of all NYSE-listed stocks above their 50-day line, and new-highs vs. new-lows lagging the breakout. The S&P remains the only major market index to maintain a footing on all-time high price ground as 2021 comes to a close.
The NASDAQ Composite Index rallied up into resistance along the very late November and early December highs, so remains in a very broad and volatile bear flag after peaking in late November.
The Market Direction Model (MDM) remains on a SELL signal.
The NASDAQ Six, consisting of Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOG), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), which hold a combined weighting of about 49% in the NASDAQ 100 Index are starting to show some cracks. AMZN continues to trend lower as it breaks support at its 200-dma while GOOG breaks key support at its 50-day moving average. AAPL and MSFT are peeling off the highs of V-shaped double-top moves while NVDA tests its 50-dma and TSLA dips below its own 50-dma.
Bitcoin ($BTCUSD) is now living below its 200-dma at the time of this writing on Saturday. It has been a sell/short since it failed on the double-top breakout attempt back in early November when media crypto-hype was at its peak. This latest move triggers a short-sale entry at the 200-day line which then becomes a covering guide.
Ethereum ($ETHUSD) is attempting to post a U&R long entry signal at the prior December low. The move has been tentative, however, but is still actionable using the prior low at 3651.32 as a selling guide. If $BTCUSD remains weak, however, we would look for this $ETHUSD U&R attempt to fail in anticipation of a corresponding move down to its own 200-day moving average.
The breakdown in crypto-currencies has short-circuited any rally attempts by crypto-related stocks, and in most cases these have reverted to short-sale entry targets. Bitcoin miner Marathon Technology Group (MARA) failed almost immediately after posting a bottom-fishing pocket pivot (BFPP) six trading days ago. It ran into resistance at the 20-dema on Monday, a shortable move at the line, before breaking back to the downside to negate the prior pocket pivot move.
Crypto-currency broker and trading platform Coinbase Global (COIN) embarked on a sharp four-day run after posting a U&R at the prior December low,. That move gave way abruptly on Tuesday when COIN gapped-down and busted the 20-dema, triggering a short-sale entry at that point. It is now back below the 10-dma.
Materials names mentioned in last weekend's Focus List Review continue to display relative strength. Recent breakouts in aluminum producers Alcoa (AA) and Century Aluminum (CENX), copper producer Freeport McMoran (FCX), and fertilizers CF Industries (CF) and Nutrien (NTR) remain intact for now.
Despite the new highs in the S&P 500 the situation underneath the market's surface, that is with individual stocks, remains mixed and murky. We reiterate our current view as stated last week: "This remains a difficult environment and we see no reason to force matters. Long set-ups, in the few cases where they have occurred as noted above, can be tested but we would position-size cautiously while maintaining strict risk-management."