The market has been on a rather wild ride for over a month now. With the action of the last two days, our indicators have swung back to a bullish status, for the most part.
The fact that $SPX has now risen back above its 20-day moving average and has closed above 2060 is positive. A second day's close above 2060 would be confirmation of the recovery in the $SPX chart.
Equity-only put-call ratios have rolled over to buy signals.
Stocks stumbled into year end, with a couple of down days, the second of which was downright nasty. But was this just illiquid, year-end manipulation (as the bulls suggest) or is it something more serious? It's a little early to tell at this point, but if things don't improve quickly, then the bears have a chance to engineer a correction.
Frankly, I don’t put much credence in long-term projections, and neither should you. How many people have you seen on TV making predictions without the least amount of statistical backing? Those would better be called “guesses” or “wishful thinking.” The worst (or best, if you’re cynical) was the CNBC reporter who made sports predictions for next year.
The reversal off the December lows was sharp, powerful, and even record-setting. The chart of the Standard & Poors 500 Index ($SPX) has returned to a bullish status, now that new all-time intraday and closing highs have been registered.
In nearly 45 years of trading, I don't think I've ever seen a market as wild as the one has been this month. Let's review the entire technical picture. First of all, the chart of $SPX has not yet returned to a bullish state. $SPX would have to trade at new highs (above 2080) in order to turn the chart bullish again.
This year, Christmas falls on the 4th Thursday, and the stock market will be open for a half day on Friday, December 26th. We will publish our next issue sometime in the morning of Friday, December 26th.
We are planning a new series of six seminars, one each on the major systems that we use to trade the markets. Each of these had a major profit with buy signals near the October lows, and all have long-term successful track records. Stay tuned for schedules, pricing, and subscription information.
When the tech boom of the 1990's collapsed, the NASDAQ Composite Index ($COMPQ) and other related indices (NASDAQ 100: $NDX) and their ETF’s (QQQ) collapsed as well. The highs that were set in 2000 seemed as if they would never be breached, and they haven’t been – so far. But with nearly everything else having recovered to new all-time highs, one wonders if the same could happen for the NASDAQ indices.
For the record, here are the peaks, peak dates, and current prices:
Various indicators have been turning bearish since mid- November. But until this week, $SPX itself had not broken down, and since price is "king," that was quite important. However, now $SPX has broken down, as it has fallen below support at 2050. This completes a bearish pattern, and a full-fledged correction is underway. This could be sharp and short-lived, and since it is taking place late in the calendar year (when seasonal bullishness occurs), that is probably the case.
The stock market, as measured by the Standard & Poors 500 Index ($SPX), sold off for a couple of days and then rebounded quickly to new all-time intraday and closing highs. However, sell signals and overbought conditions abound, so all is not bullish.
With $SPX making new all-time highs, its chart is bullish, and the trend of the market is higher. Price is the most important indicator. That has not changed.
The feature article discusses a protection technique – collar buying – that is favored by many sophisticated stock owners, including institutional traders.
