Technical Analysis:
- Quiet day yesterday for the stock market as the S&P 500 (SPX) pulled back a meager 5 points.
- Volume on SPDRs S&P 500 (SPY) was dropped significantly from the previous day’s reading and was well below recent averages. You can expect even lighter volume today and tomorrow as more traders leave for the Christmas holiday.
- Price action too will become very sluggish and in some cases unsustainable. Aggressive moves will much less likely and breadth will flatten out some.
- The rising trend-line that started off of the November lows is being tested, following yesterday’s pullback. The trend-line is extremely steep, so that, even if the trend-line is broken, doesn’t necessarily mean that the market will start to sell off again. Instead it merely suggests that the move is flattening out a bit and not as bullish as it once was.
- CBOE Market Volatility Index (VIX) continues to get slammed. Yesterday, it actually dipped below 11 intraday, but closed the day at 11.27 and down 1.6%. The support level going back to the August lows held yesterday.
- United States Oil Fund (USO) pulled back yesterday a good bit, but the rising trend-line is still intact and is looking to recover at the open today.
- For now the market remains very bullish and shows little to no indication it desires to pullback in the near term. Trying to front-run a market top at this juncture is a very futile exercise and should be avoided. Wait for the market to show signs of cracking via price action before getting net short on this market.
- So far the market is basically ignoring the rate increase entirely. There has be no impact so far. Last year, the selling picked up considerably right at the end of the year when the traditional Santa Claus rally typically kicks off.
My Trades:
- I added two new long positions yesterday to the portfolio.
- I did not close out any positions yesterday.
- I will look to add 1-2 new swing-trades to the portfolio today.
- I am currently 40% Long / 10% Short / 50% Cash
Chart for SPX:
