Wednesday’s action was a typical holiday trading action. The market traded in a very narrow range for most of the session but there was some moderate short covering going into the close which pushed the market into new historical highs at 2073.29.
The configuration suggests that the market should continue toward the 2078/2087 short term projection over the next 3 to 5 sessions. However, Wednesday’s higher close did signal a new Fibonacci projection for the rally of 2098/2111 with an extreme of 2119. These levels are projected most likely into the December months over the next 4 to 6 weeks as a target.
With Friday being a shortened holiday session, it is likely that it will trade in a very quiet range. Expectations at this time are for a continuation to the upside. The key level on the downside for Friday will be 2064.10. A penetration would suggest a decline toward 2056.40 there is currently only a 30% probability for this to occur.
Friday’s close will represent both a monthly close as well as a weekly close. This will represent a confirmation close after the reversal that occurred in October suggesting at least 2 to 3 more months of higher prices are likely. This will also be the sixth higher weekly close suggesting that there is a continuation for the intermediate term for a 2 to 3 week rally a hesitation and then a continuation as we go into year-end is the general expectations.
The month of December has a tendency to have a slight upward bias, but as the month unfolds most of the activity will be centered on window dressing type activities from the institutional participants. There is a possibility of a decent month to the upside in December due to many folks that have not been as well positioned trying to markup their portfolios for year-end.
With the GDP coming in at 3.9, beating expectations, you would’ve expected a stronger market. But the opposite unfolded as the market traded off early in the session on Tuesday and rallied back to positive territory just to settle slightly lower on the session. This has been occurring over the last several times major releases come up. We get a non-reaction followed by a delayed reaction over the next 2 to 3 sessions.
The market should open higher, with a 60 percent probability to close higher, should the market remain above the 2064.10 level today.
Today’s Key Levels
|Prior Close||2072.83 +5.80|
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With the GDP coming in at 3.9 and beating expectations, you would’ve expected a stronger market. However, the opposite unfolded as the market traded off early in the session, rallied back to positive territory, only to settle slightly lower on the session. This has been occurring over the last several times major releases come out; we get a non-reaction followed by a delayed reaction over the next 2 to 3 sessions.
Bloomberg has an interesting video interview of Alan Greenspan and the current state of the economy post QE. You can watch it here.
Today is one of the more substantial news days with reports primarily focused on real estate. We could see some follow through to the upside as we will most likely complete the biggest part and most active day of this week. While the market will be open for a half a session on Friday, it is likely to be very light trading.
The configuration continues to suggest that the market will move toward the 2078 level with a higher end expectation of 2087/2092. On the downside, the critical level today is 2054.95. This is also represented by the 10 period moving average which has been the key support throughout the last two weeks of trading. A penetration of this level would suggest a further decline to the 2037/2041 level but there is only a 30% probability for that to occur today.
On the upside today, a penetration of 2071.90 will set the tone for a move toward the 2078/2087 range over the next 2 to 3 sessions.
The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2062.15 level today.
Today’s Key Levels
|Prior Close||2067.03 +2.38|
As the markets open today, we will have new information about the GDP numbers which are expected to show a 3.3% rate. It is generally expected that there will not be any surprise from this, but with the polar vortex affecting a good part of the country, the fourth quarter is likely to show a moderating effect upon the Christmas shopping season. In the end, the markets will be paying more attention to activities in Europe as we enter the latter part of this week. Since the markets are closed Thursday and there’s a shortened holiday market on Friday, we are likely to see most of the market sentiment impact coming from overseas.
The configuration suggests that the market is likely to continue higher, working toward the 2078/2087 levels over the next 5 to 8 sessions. As I mentioned in yesterday’s commentary, the extreme right now is 2092 on the upside for the short-term. Intermediate term trends are suggesting that we could go as high as 2200/2340 over the next 6 to 8 months.
The big turnaround in the major indices are starting to develop substantial trends that are likely to continue. There are still many stocks and secondary market segments that are still not participating fully. Yesterday, the Russell 2000 and the S&P small-cap indexes were up by 1.24/1.17% respectively.
The key number on the downside today is 2055.75. A penetration would suggest that a minor top is in place. There is only a 30% probability for that to occur.
The market should open flat to higher with a 60 percent probability to close higher should the market remain above the 2060.95 level today.
Today’s Key Levels
|Prior Close||2069.41 +5.91|
Remember the first quarter of this year when the polar vortex caused the economy to actually have a negative GDP? If you look at what’s going on in a big section of this country right now, especially in the Northeast, there certainly is a major disruptive event occurring. This time market participants don’t seem to care at all. Nor do they care about the Ukrainian situation, falling oil prices, or anything else as far as that is concerned. The market continues to have a strong underlying bid that doesn’t seem to want to go away.
Be sure to tune into Market Thunder at 12:00 noon Eastern Time today for a complete review of all the technical aspects of the S&P 500, treasuries, US dollar and more.
Yesterday’s action saw the market trade down to the key support at the 2040 level only to rebound to close higher on the session once again. This reversal pattern continues to suggest higher prices for the next several sessions.
The configuration suggests that a close over 2057.50 will indicate higher prices with a minimum of 2075 and the possibilities of going to 2103. Just a few short weeks ago it looked like the possibilities of all this was impossible. Now, it looks very possible that we will see much higher prices unfolding in the weeks to come.
The short-term models have been long the S&P 500 since 1951.59, 100 points ago, while the intermediate model remains neutral. All of this could change drastically as we go into tonight’s run as there has been a fair amount of progress across the board seeing further traction on key stocks that could drive the markets higher.
The key level on the downside today is 2042.65. A penetration of this level (only a 30% probability) would suggest a decline down toward the 2027/2020 levels.
The bias continues to be on the upside for the next 3 to 5 sessions indicating the market is likely to move higher in this pattern.
Be sure to tune into the market thunder show today at 12 noon Eastern Time for a full review of the indices and the expectations.
The market should open flat to higher, with a 60 percent probability to close higher, should the market remain below the 2042.65 level today.
Today’s Key Levels
|Prior Close||2052.75 +4.03|
As I discussed in yesterday’s commentary, we did see a breakout of the pattern. It is critical that the market continues higher in the next two sessions while remaining above the 2039.80 level. A penetration of this level will suggest a pattern failure and the possibility of declining toward the 2027/2020 levels. While the markets are trading at these high levels, it is critical that the follow-through happens after a breakout. These types of rallies remain very fragile and can fail at any moment.
The configuration suggests a 40% probability of going to 2075.60 and a 30% probability of going to 2092.85. These probabilities will decline should we not get a close above the 2057.65 level in the next two sessions.
The intermediate and longer-term momentum continues to suggest an underlying positive tone while the support levels associated with this trend are substantially below current levels. This suggests that there is a potential for increased volatility over the next 5 to 8 sessions. It also suggests that we could see some backfilling over the next 2 to 3 weeks if we do not see a close above the 2057.65 level.
The market should open flat to lower, with a 60 percent probability to close lower, should the market remain below the 2054.55 level today.
Today’s Key Levels
|Prior Close||2048.72 -3.08|
Over the past six sessions we have seen the market continue to trade in a very narrow range. Yesterday’s action saw the market breakthrough the 2051 level, trading as high as 2056.08. The configuration that has unfolded over the past six days have set up a pattern that suggested prices could move to the 2075/2095 levels with an extreme of 2103.
While this miraculous rally continues to hold above the 10 day moving average we have seen an acceleration to the upside with the momentum starting to surge both on daily and weekly graphs.
The critical level on the downside for today is the 2041.70 level. A penetration would suggest that the market would decline toward the 2034 to the 2029 levels. There currently is only a 30% probability for that to occur.
As I have mentioned before, SPY on a daily VPM model signaled to go long at 1951.59 on 24 October. While the short-term momentum is showing further strength, we will need to remain above the 2051.80 level to have a probability of signaling a reentry on the intermediate level.
There is the beginnings of a minor rotation that is occurring. Should we stay at these higher levels into Friday’s close, we could see the VPM database take on further traction. Our average individual stock portfolio is between 50 and 60% invested with the typical ETF/mutual fund remaining between 30 to 50% invested.
While it has been expected that the market would form a top, there appears to have been a resurgence of momentum with yesterday’s prices suggesting a higher probability for a continuation to the upside. As I have mentioned several times in the Market Thunder show, if you continue to be concerned about volatility then use the daily models for the Global Equity strategies to deal with increased volatility as we move into year-end.
What continues to be a driving factor in the strength of the US markets is the view that the United States is the only place of growth. In the last two weeks we have seen $183 billion of foreign investments come in. This is the carry trade and the equity trade that I discussed on the Market Thunder show several times continuing to push market prices higher. While fundamentals may not completely support some of the prices that we see, the cash flows across the planet heading to the US are the driving factor.
The market should open flat to lower, with a 60 percent probability to close lower, should the market remain below the 2054.20 level today.
Today’s Key Levels
|Prior Close||2051.80 +10.48|