Difficult to be short under such circumstances.
Money has been mostly moving into the NQ8 and the S&P500 as a way to participate to the Tax deal consequences. This, combined to an exodus from US Treasuries continued fuelling the equities bubble.
Small caps however looked weaker than the rest of the market, either on the Futures, the ETFs or the EV based Money flow. (Note that the S&P500 Futures display a negative EV pattern here)
Futures:
ETFs
Effective Volume based Money Flow calculation
Industry groups Money Flow
Most Industry groups had a positive Money Flow, even XLF, which had been negative in past days.
XLP (Consumer staples) looks the most negative as investors are rotating into less defensive sectors.
XLU displays a positive divergence and a buy signal, while GDX displays a negative Money Flow pattern.
On the Treasuries and currencies front, There are a few LEV/price divergences that can be detected, except for the US$, which still looks bearish here.
Conclusions:
Small caps are much less attractive than the rest of the market and I believe can be shorted in strength as the shorts covering rally of the last two days was not that strong.
I still believe that rates differentials should serve as a support for the US$.
For now, I am only 20% long in BEAT. I have kept the position during the pullback of the past days as the EV pattern still looks positive, but mostly because there are not that many interesting long ideas.
