Did Santa come too soon? This time of year usually brings on a decent rally (as Wall Street traders want their bonuses) but, as I’d recently commentated, the rally off the October lows had come too far too fast and a correction was on the cards. So what next…?
Let’s start with our usual look at the bigger picture of the S+P:
No doubt we’re still in an uptrend, but a trend is only your friend until it ends, and they can end sharply. The daily price action is getting wide and sloppy compared to that tight uptrend of 2013 and earlier 2014, and that’s not a good sign.
So let’s zoom in and check out what we’re looking at:
Above, the blue line is the 50 day average price line, the red line is 200 days. I recently said I’d like to see a pullback to the 2,000 area and that I’d consider that healthy. And that’s where we’re at, as you can see, but I don’t care for the speed at which that happened on Friday- that’s pretty aggressive.
Bottom line: if the market can hold the 2,000 mark and then progress higher, a very healthy sign. If it doesn’t, then we’ll watch closely how far it goes as it could be something deeper… like the end of the bull market, so stay focused.
Best
Jim.
The author has an interest in the securities discussed in this article. Source of charts: stockcharts.com
Note from editor: check your email to see if you received a limited time invitation to Stock Code Breaker.
