Speculation about a possible NK new missile test on Friday was quickly discounted as large investors and index buyers continued moving money into equities.
NQ8 is still attracting good money here
Small caps are still above their neutral level and on a longer term view, the Money Flow seems to be making higher lows and higher highs even though it is an oscillator that naturally has to fall back to 0.
IWM displays a bullish flag.
Index investors are still buying
Even utilities and VNQ attract buyers
Although XLRE looks somewhat weaker here.
There are however two interesting aspects to point out: Energy and the US$.
We can see that oil is weak here. However the XLE Money flow is still rather strong compared to the OIH (Oil producers) Money Flow. The reason for this discrepancy is simply that XLE includes most energy conglomerates such as XME, CVX, etc. and is also favored by index investors. On the other hand, OIH includes mostly middle to small caps energy producers which carry higher levels of debts and need oil prices to push higher.
On the currencies front, it is rather strange to see the EV pattern of the US$ displaying a continued negative divergence. This goes against the rational carried by higher interest rates and a weaker Euro zone.
The NK uncertainty pushed gold prices back up on Friday, but the general Effective Volume trend is still negative.
Conclusions:
Any possible bad news has been totally discounted. Nothing can possibly go wrong here.
oil producers look weak in terms of Money Flow and hence, OIH could be a good short target if ever the general markets weakens, which is not the case for now.
Earnings season is upon us. Now will be a good time to test valuations level against tax deal hopes.
