Technical Outlook:
- The Fed yesterday came through on what was widely expected and that was a 1/4 point rate increase. The market subsequently rallied hard thereafter.
- With yesterday’s monster rally, SPX managed to reclaim every major moving average including the 10, 20, 50 and 200-day moving average.
- A lot of talk about the “Golden Cross” taking place on SPX with the 50-day moving average crossing above the 200-day moving average. I don’t put much weight behind this phenomenon.
- Volume was extremely strong yesterday on SPY and much higher than what we saw the previous two days – and almost as high as the volume levels reached on Friday.
- So far SPX has rallied 80 points off of the lows – often times it is very possible to rally well over 120 points before running into any heavy resistance.
- Also, based on the behavior of the intraday action, it doesn’t look like the shorts have really been pressed into closing out of their short positions – i.e. they haven’t been squeezed quite yet.
- The key for today is for the bulls to break above 12/1 at 2101. If that happens, there is a higher-high that finally forms on the market that hasn’t been seen since October.
- VIX continues to collapse, dropping another 15% down to 17.86.
- T2108 (% of stocks trading above the 40-day moving average) increased 40 points (huge move!) to 30%. Even with the huge move in this indicator, it is still well oversold with plenty of room to run.
- Despite a strong 3-day rally, the market is no where near being overbought at this point.
- SPX broke out of its bull flag pattern on the 30-minute chart.
- Island reversal pattern has formed on the daily SPY all the way down to the 1 minute chart. This is a very bullish pattern for the market and could very well mark the bottom to the recent selling.
- S&P 500 has followed a similar path to that of 2014, in fact it is eerily similar with both sell-offs being within 3 points of each other in terms of sell-off depth.
- 2014 ripped higher following this sell-off for the remainder of the year.
- Also an interesting analog for 2015 has been its similarity to 2011 price action.
- For twelve years straight, the market over the course of the last 30 trading days of the calendar year, has yielded a net positive gain, and thus reinforcing the concept of the “Santa Rally”.
My Trades:
- Closed out BIDU yesterday at $199.90 for a 0.4% gain.
- Added two new long positions yesterday.
- I will consider adding 1-2 new positions today if the market can continue this three day bounce.
- 60% Long / 40% Cash
- Remain long: MSFT at $54.81, BDX at $154.94, UPRO at $59.88 and four other positions.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
