Monday January 5, 2015

If there was one thing that the stock market tried to tell us on this first day of the first full week of 2015, it would probably be that 2015 will be no 2014, as the S&P 500 is now down four sessions in a row, the first 4-day losing streak since December 2013. 

The magnitude of today’s decline probably caught many investors by surprise. It will take a few sessions for investors to digest today’s loss and to rethink their plan for 2015. There is quite a lot of data due out in the next few days which will help gauge the strength of our economy.

The Market Model for the four major indexes went to a Sell mode with a strong Overbought reading.  The recommended Asset Allocation reading also declined to 62.5% Long and 37.5% Cash.  We will be liquidating the $FL (Foot Locker) position tomorrow as the Opinion was downgraded to Neutral.  

Keep a close eye on the Breadth indicators for the next several days as today was the third consecutive day where the S & P 500 closed with a strong Distribution rating.  It was not but a few days ago when this major concluded a run of six consecutive days of Distribution and that had not occurred since prior to 2000.  Expect volatility to remain relatively high until earnings can give us a better picture in several weeks. For the S&P 500, watch for support in the 2000-2003 area.