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Sector Focus
The iShares Dow Jones Transportation (IYT), like IWM, held up very well on Friday, closing down about 0.5% as the early selling was well absorbed. As I noted last week, the transports have been outperforming the industrials recently

It would be a very positive sign for the market in 2013 if the transports can overcome its divergences with the industrials.

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As one would expect, all of the ETFs were hit Friday, with the largest losses in the market-leading Select Sector SPDR Financial (XLF)and the Select Sector SPDR Consumer Discretionary (XLY), which were both down over 1% on the day.

The Select Sector SPDR Energy (XLE)and Select Sector SPDR Technology were also down 1% or more. The Select Sector SPDR Utilities (XLU) were flat for the day.

The daily chart of the Select Sector SPDR Financial (XLF) shows the sharp rally from the November lows, as quarterly R1 resistance at $16.70 corresponds to last week’s high. There is initial support now at $16.20 (line a), with further at $15.80 to $16.

The Select Sector SPDR Consumer Discretionary (XLY) gapped lower Friday, and the weak consumer sentiment numbers did not help. The break of the downtrend (line b) in November confirmed that the correction was over. There is next support at $46.40 to $46.80 with the quarterly pivot (blue line) at $45.74.

Crude Oil
The February crude oil contract was down over $1.30 per barrel Friday, but still closed the week higher. The technical action still suggests that crude oil is bottoming, and a close above last week’s high at $90.54 would be positive

There are still no strong signs from the relative performance or RS analysis that the energy sector is ready to lead the S&P 500, but I am watching it closely.

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Precious Metals
It was a rough week for the metals, as the heavy selling I observed last month in "Two Paths for Precious Metals" was indeed sending a warning. The Spyder Gold Trust (GLD) rebounded Friday, but still was down over $3.70 for the week.

GLD came close to the 61.8% support at $158.29 last week, as the uptrend (line a) was tested. There are no signs yet of a bottom, and if this level is broken a drop back to the $155 area is possible. The longer-term analysis still suggests a turnaround in 2013.

The Week Ahead
Even though stocks were hammered early Friday, they closed well above the early lows. S&P futures hit a low of 1,391.25, but closed at 1427.50.

The improvement in the market internals does not suggest that we will see more than a few days of selling, but the test is likely to come after Christmas.

Some of the buy zones in my recently recommended stocks are likely to be hit on this decline, but most of them are placed near good support. The small-cap ETFs and closed-end funds look like the most conservative plays as we head into 2013. The equity income funds I reviewed a few weeks ago also deserve consideration.

It will take a deeper correction in the global ETFs to take them back to good support, and we may have to wait until they develop new trading ranges before we get a good entry.

This is the last Week Ahead column for 2012, as the next column will be published on January 4. My best wishes to all of you for the holidays, and thank you for all of your support in the past year.

• Don't forget to read Tom's latest Trading Lesson, The Most Powerful Pivot Level