Weekend Market Profile

Friday was quadruple witching day. That means that many index futures and options, plus stock futures and options expired. With expectations of increased volatility after new all-time highs in the SPY and DIA, the day was comparatively placid.

Yet another example of the volatility is in the hype, not the market.

Last Thursday, we saw lots of potential-and also some concerns if the bullish phases in the key sectors fail to confirm. For example, Semis (SMH) confirmed the bullish phase. The “red” day was an inside day. The range going into Monday now is 106.50-108.

I like that clarity.

Transportation (IYT) is holding support. It must move up and though, over the ATH 209.43 to negate the topping pattern.

Retail, XRT, did not clear 51.80.  It needs to, but for now, the momentum to the upside appears intact.

Biotechnology (IBB) confirmed the bullish phase, while Regional Banks (KRE), went back into an unconfirmed warning phase.

What did impress, was the move up in emerging markets and oil. Marijuana was a big winner as well, with tremendous swings.

However, I look at that as an adjunct market, not so much as a key to the macro picture.

If looking at the overall market like an FBI profiler, what “personality” traits should we watch out for?

Besides the need for the sectors and the indices, to hold up, 3 things makeup the market’s profile:

The Dollar.

As measured by UUP, the Dollar Bull ETF, it closed above a key weekly moving average, but below the pivotal 25.00 level. Further declines will certainly have an impact. Should UUP break under 24.80, that dollar weakness bodes well for commodities, the euro and emerging markets, something we wrote about in the last couple of weeks.

In fact, the move higher in EEM and FXE, for instance, has already begun.

The Rates

Since I prefer to speak from the charts, using TLT’s, the ETF for the 20-year Treasuries, the breakdown is significant. Mortgage rates are the highest they have been for the last 4 years.