Inauguration.  is a formal beginning or introduction or formal induction into office and for 2nd term presidents it seems a strange practice as they already are the president and vice president.  Today however the president and vice president officially were sworn in and begin a second term. The event continues on Monday as a party for Washington DC.  Again it was a very good week for the market as the rally continued. We had 18 more watch list stock hit their buy points this week after 20 the week before and 39 the week before that. Pretty great way to start off the new year.   The volume this week was not great but it did increase and especially on Thursday and Friday. The number of new highs also increased and the mid and small caps continue to lead and that too, is bullish.  This week the corporate earnings continue and watched on the tech side will be AAPL, GOOG, IBM and NFLX. Airlines include LUV and DAL while some household names like PG JNJ, SBUX and MCD will report.

For all of your holds it is a good idea to consult the  Earnings Calendar

Martin Luther King Jr. day
At the movie theaters now are two films concerning slavery. Django Unchained by Quentin Tarantino depicts the brutal treatment of slaves in the period 2 years before the US civil war and Lincoln from director Steven Spielberg tells the story of President Lincoln and his successful fight to get a yes vote for the thirteenth amendment to emancipate the slaves. The Thirteenth Amendment to the United States Constitution outlaws slavery and involuntary servitude, except as punishment for a crime. It was passed by the Senate on April 8, 1864, by the House on January 31, 1865, and adopted on December 6, 1865.

Last year on this day we featured a video that presented Martin Luther King's I have a Dream speech in a unique way that appealed to many around the world who had not known the speech. We noticed this very contemporary dance mix tribute done last year Chris Dave - I Have A Dream (Radio edit).  The speech was given 50 years ago and was so meaningful that its words today even fill clubs and concerts The original speech from August 23, 1963  is here

Before we get to the  charts - a  music video.  

Vitaliy Vladasovich Grachyov better knows as Vitas is a singer-songwriter of Russian decent but was born in Latvia. He is very well known especially for his 5-octive range and incredible falsetto voice. This song is Opera No. 2 and was released as a single in 2001 and much of his rise in worldwide recognition is because of the sharing of his work on the Internet. A more recent  music video

First-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended January 12th, according to a report released by the Labor Department. The report showed that initial jobless claims fell to 335,000, a decrease of 37,000 from the previous week's revised figure of 372,000.

New residential construction in the U.S. increased by far more than expected in the month of December, the Commerce Department revealed in a report. The Commerce Department said housing starts jumped 12.1 percent to a seasonally adjusted annual rate of 954,000 in December from the revised November estimate of 851,000.

The homebuilder sentiment index rose to 47 in December from a downwardly revised reading of 46 for November. The index is now at the highest level since April 2006 and inching closer to the ‘50’ level separating expanding and contracting activity. The present sales conditions index and the future sales expectations index rose to 51 each, while the index measuring prospective buyer traffic edged up 1 point to 36.

Consumer prices in the U.S. came in unchanged in the month of December, according to a report released by the Labor Department. The Labor Department said its consumer price index was unchanged in December after falling by 0.3 percent in November. The latest figures matched economist estimates. Excluding food and energy prices, the core consumer price index edged up by 0.1 percent for the second straight month. The modest increase in core prices also came in line with estimates. 

Industrial production increased 0.3 percent in December after having risen 1.0 percent in November when production rebounded in the industries that had been negatively affected by Hurricane Sandy in late October. For the fourth quarter as a whole, total industrial production moved up at an annual rate of 1.0 percent. Manufacturing output advanced 0.8 percent in December following a gain of 1.3 percent in November; production edged up at an annual rate of 0.2 percent in the fourth quarter.  

For some further perspective on the current state of the stock market, today's chart presents the long-term trend of the S&P 400 (mid-cap stocks). As the chart illustrates, the S&P 400 rallied from late 2002 into the mid-2007 and then gave most of that back during the financial crisis. However, the S&P 400 rebounded well by recouping all losses incurred during the financial crisis and making new record highs in a mere two years. Since mid-2011, the S&P 400 has traded in a rather choppy fashion which has helped define its current wedge-shaped trading range (see the red and green trendlines). More recently, the S&P 400 has embarked on a sharp rally which has allowed it to break above resistance (see red line) and make new all-time record highs.

After This past week's  sectors.

This past week's indices  -   

Sydney Australia DJ team  Flight Facilities twitter  @flightfac

The Dow, S&P 500, Russell 2000 and crude oil all closed at the high for the month with the NASDAQ not far from it. The Russell is at new all-time highs and while the S&P 400 midcaps led this week, the Russell was the second largest gaining index. Gold gained over 1% this week but is still down for the month.

On the 60 min. major index charts we see how tight the Bollinger bands had become midweek and that is why we expected the expansion at the end of the week. Technically in this position they still have some upside potential on Monday before some needed consolidation a bit later on.

On the Dow weekly chart we see the high on Friday was within 12 points of the 2012 high and the volume was better than it has been in a month.

The volume expansion is quite noticeable on the daily chart as it increased on Thursday and Friday as it pushed very close to the horizontal resistance. The RSI has not yet gone over 70 so we have room to run in that regard.

On this, 2-day-per-bar chart we see that if it can close above the 2012 high it will have  a very good chance of reaching the 127.2% Fibonacci projection above 14,000. This also would take the index up to the top line of this parallel channel.

On the Dow futures from the low near January 8 you see the several times it created a bullish flag or top trendline that gave an opportunity to buy on that break. On Friday we posted this chart showing the setup of the bull flag shown in the top and the potential that it would breakout before the close, which turned out to be the case.

The utility average, which had dropped after testing and slightly breaking over the 200 day EMA, bounced back up on Friday from the other moving averages to close right at resistance on a bit higher volume. A breakout here and above  465 could start a longer move back up to the top trendline.

The transportation average had another very nice week after hinting of a breakout the previous week. It gained over 2% this week closing at the highs.

The NASDAQ summation continues on the buy side for the NASDAQ and note that it's levels are where we had a negative crossover late last September.

The moving average of the number of new highs on the NASDAQ shows a significant advance which is bullish but the levels they have reached are also levels where we have, twice in 2012, seen pullbacks.

There is now a larger distance between the moving average of new 52-week highs on the NASDAQ above the NASDAQ 100 price than we have seen on this chart throughout 2012.

The NASDAQ remains slightly above this blue trendline but we have not seen a big the expansion above it. The NASDAQ has not performed as well as the other induces.

The NASDAQ is still within this up trending parallel channel on the 60 min. chart where the top line will coincide with horizontal resistance at 3196.

That level mentioned above is the highest from 2012 and slightly over that is the 161.8% Fibonacci projection based on the shorter-term first wave move.

The NASDAQ 100 mechanical chart which had shifted back to a buy at the beginning of the year, continues higher.

The NASDAQ 100 futures sits below the 127.2% projection which is resistance and a close over could take it to the 161.8% with some resistance at about 2775.

The volatility index remains calm as it closed under 13.

The semiconductor index has remained  bullish since its initial close over the 50 week EMA and then its breakout above the green trendline three weeks ago and it now is approaching the upper trendline near 420.

The NYSE new highs minus new lows remains elevated which is bullish and it is has backed off from its extreme highs which is also a good thing.

Over 88% of stocks on the NYSE  are now trading over their 50 day moving average, which shows good strength in the market but also brings caution as from these elevated levels, we do in time get declines.

The S&P 500 bullish percent indicator as been on a buy since the third week of November gaining about 100 points.

The lazy trading S&P 500 had a whipsaw in December but  still has gained over 50 points from the last buy point.

In the previous week we had a very slight break above resistance for the S&P 500 and this week's chart shows the 1% gain moving above this resistance on a bit higher volume.

On the daily chart. The first days of the week were only sideways maintaining support at the dotted line before the break above on Thursday.

On the 60 min. chart we see a parallel channel about 20 points in width it has maintained since breaking back inside at the start of the year.

On this 15 min. chart view we see a trendline top not far above and this channel which is slightly converging.

In our 2-day-per-bar chart note that the S&P 500 has closed over this breakout line so we now has at least a 60% chance of running up to the 127.2% at 1511. If it continues from there, at the moment the 161.8% is at the top parallel channel trendline.

On the mechanical 15 min. chart as the S&P 500 was in a very tight range at this first part of the week we had many little whipsaws leading to a nice expansion long on Thursday and then again on Friday after a morning dip.

This 5 min. chart shows the low was reached about noon on Friday and from there about a 10 point move into the close

The S&P 500 had its own parallel channel closing right at the top line on Friday.

On Thursday morning we showed this parallel channel of the SPY and how the 161.8% intersected the top channel trendline. It turns out that on Thursday it made that target exactly, pulled back on Friday, then moved back up to it by the close.

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