AT40 = 64.5% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 62.6% of stocks are trading above their respective 200DMAs
VIX = 9.8
Short-term Trading Call: cautiously bullish

Commentary

The New Year started with fireworks with the S&P 500 (SPY) gapping up to a 0.8% gain and new all-time high. The Nasdaq gapped up and sprinted to a 1.5% gain and closed above 7,000 for the first time. The PowerShares QQQ ETF (QQQ) gained a stellar 1.7% yet managed to stop just short (by a fraction of a point) of a new closing all-time high.

The S&P 500 (SPY) gapped higher to a new all-time high.

The Nasdaq gapped higher to a new all-time high and historic first close above 7000.

The PowerShares QQQ ETF (QQQ) soared but stopped short of fresh history.

The volatility index, the VIX, confirmed the bullish sentiment with a fresh plunge under 10 and back into “extremely low” territory.

The volatility index dropped back into increasing familiar territory hovering above all-time lows.

Despite these fireworks, my favorite technical indicator, AT40 (T2108), the percentage of stocks trading above their 40-day moving averages (DMA), did not share in much of the excitement. AT40 only increased from 60.6% to 64.5%. For the past two weeks, AT40 has churned just below the overbought threshold of 70%. As a reminder, until AT40 pushes into overbought territory, my bullish trading call stays qualified as “cautious.”

The most conspicuous non-participants in the beginning of the year fireworks were financials. The Financial Select Sector SPDR ETF (XLF) closed the day essentially flat and even spent part of the day in negative territory.

The Financial Select Sector SPDR ETF (XLF) is stuck in a month-long consolidation pattern.

Still, the year could hardly have started better for financial markets.

STOCK CHART REVIEWS

BHP Billiton Limited (BHP)

Commodities are on fire in a sign that global growth is truly kicking it into high gear. BHP Billiton Limited (BHP) practically says it all as a diversified commodities player. It is also the winning half of a pairs trade I recommended in late September.