The Brains Trust - 2016, page-187

Most sectors in New York left long lower tails in the first trading session of the year and overnight prices have come back to test these levels without breaking them and in the most part closing better.

The sell-off took place on very high volume which should be bullish. But I have a little niggling worry which we need to see sorted out pretty quickly – of all the sectors of the New York market that I follow, the two strongest are Staples and Utilities – the most conservative of the lot. I mentioned Staples last week – the necessities of life such as food – and I think this could become a recurring theme over 2016. (Watching for pretty charts in this sector here. We have already had success in SFG). But for New York to take on a healthy look, I need to see money start to move back into such things as Financials (XLF) and Discretionary (XLY).

And then looking at the oil sector over there – oil itself has come off a bit but XLE is trying really hard to do something positive here. I have mentioned before that the MACD indicator had turned up so even if XLE comes back to the low again, we may start to see a bullish divergence set up. Always nice to see this sort of thing after a terrible bear market.

I thought Australia was putting in a pretty good performance. We had a huge rise going into the end of last year without a correction along the way. Yesterday was down sharply but after a 400 point rally some profit taking is not unexpected.