1/21 Watchlist: Don't Panic Yet. It's All Good.

Blue chip stocks tumbled as much as 2.1 percent from today's open to the low (so far), on a bear signal from Person's Proprietary Signal. The so-called fear index (VIX) rose 18.8 percent on a bull signal.
The news coverage no doubt will be apocalypic. But, it is important to note that the S&P500 (represented here by SPY, the exchange-traded fund) remain in a bullish price pattern.

The bull price pattern is a series of high highs and higher lowers. The market never moves in a straight line for long periods of time. As J.P. Morgan said when asked what the market would do: "It will fluctuate." That's no less  true today than in his day.

SPY set a high of 115.14 on Jan. 14 as it spent more than a week trading sideways. Today it broke out of that range and declined to 111.56 before pulling back to the upside. The pullback happened at a support level set on pullback on Dec. 31 (and also repeatedly in that area in November and December). The "higher low" set on that day was 111.39. So if today's low, 111.56, stands, then SPY is making high highs and higher lows. If it breaks below 111.40, then the bull pattern is broken. Amid all the paraphernalia of technical analysis, it's easy to forget that first and foremost, trading is about price, those series of bars or candlesticks that get traced on your chart.

I don't usually relate stock market moves to news, but this one happened as the Obama administration proposed limiting the size and risk-taking of banks. The finance industry etf, XLF, traced a 4.5 percent decline from high to low in a net down day (so far), but with no bear signal.

Other markets: Treasury long bonds up, corporate junk bonds down, gold down, oil down. The dollar against the Euro -- it opened at the bottom of yestrday's trading range, and has stayed their some fluctuation. No new pps signal on any of them.

Here's what interesting in high-volume . . .

. . . exchange-traded funds:

• DIA, QQQQ and IWM -- tracking the Dow Jones Industrials, Nasdaq and Russell 2000 respectively -- displayed bear signals, illustrating that the markets were moving more or less in lockstep.
• XLE, tracking the energy sector, showed a bear signal on a price decline.
• Interestingly, the regional banks etf, KRE, was up, unlike the broader financial sector.
• XLV, XLP, XLY and XLU, tracking health care, consumer staples, consumer discretionary and utilities, showed bear signals and price declines down to near-term resistance. The signals are count-trend, except perhaps for XLU.

. . . corporate shares:

• JPM, J.P. Morgan's eponymous bank, certainly fluctuated today. A bear signal and a 6.2 percent decline from high to low. The stock is in a down-ish trend. It's not a trade for me because the move was news-based.
• Other banks were up. WFC (Wells Fargo) and USB (U.S. Bancorp), for example. No signals, though.

 In general, signals I'm seeing on the corporates are count-trend pullbacks. If today's broad move in fact does mark a decline from a major top, then by the rules of my game, I would wait until the shares had established the new downtrend -- lower highs and lower lows -- before entering on the bear side. In any case, I don't think I want to hold a new directional position over the weekend. So, no further trades for me today.

Among my holdings, PALM, after a morning decline, has bumped up to about a nickel into profitable territory on the stock leg. The stock is one leg of a covered call. CVS, which is an iron condor, continues to show a bear signal and is in the upper part of the profitable range. ERTS, also an iron condor, is showing a bull signal, but it, too, remains profitable.



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Topics:
S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs Palm smartphone cellphone Pre Plus Pixi Plus, Electronic Arts, Dow Jones Industrial Average DJIA, Nasdaq, Russell 2000, energy, health care, consumer staples, consumer discretionary, utilities, regional banks, J.P. Morgan Chase, Wells Fargo, U.S. Bancorp.