Looks like 2004
The lack of weakness on Wednesday did end up being a precursor to more strength Thursday. This rally is looking a lot like the November rally of 2004. We were able to ride that one up together as the indicators did not get bearish until later in December. This year the indicators are getting weaker earlier so I don't know how long this strength can last. So, do we need another pullback to regenerate? I think so.
If you compare the two years, you see there was a 10 month consolidation period in 2004 before the S&P 500 made a strong breakout (point A). That breakout led to this year's consolidation which is now in its 11th month.
Chart provided courtesy of www.decisionpoint.com
Things never play out exactly as prior occurrences, but you will notice that the breakout in 2004 came after a higher low was made in October. So the breakout attempt after the August 2004 low failed as the market needed one more pullback to gain some strength for the breakout run in November. Comparing that to the current market, the S&P has got to be close to running out of steam, even if yesterday's action didn't indicate it. A pullback would give the market the strength it needs to move higher. I'd be surprised if it did move much higher without that pullback.
Bonds broke their recent downtrend and we could see a little move higher here. But there will be some resistance near the 50 and 200 day moving averages. That doesn't leave too much room to move. The strong support area down near 110 was never tested and that may be the next target if a rally fails. Bottom line, it looks better but bonds have a lot to prove before getting bullish.
Chart provided courtesy of www.decisionpoint.com
The new AAII Investor Sentiment Survey came out yesterday. Those polled who said they were bullish was 54%, down from 59% last week. The bears are at 22%, slightly fewer than the 23% last week. The 22% is on the low side and is the lowest reading since the summer highs. This is a bit of a negative for the market.
Here is something to consider for next week:
Chart provided courtesy of www.sentimentrader.com
Wednesday is -1, Friday +1, and the Monday after the holiday will be +2. We'll talk more about it next week.
Please check out the Item of the Day in The Gallery. That's all for today. Currently 100% G fund. Thanks!
The lack of weakness on Wednesday did end up being a precursor to more strength Thursday. This rally is looking a lot like the November rally of 2004. We were able to ride that one up together as the indicators did not get bearish until later in December. This year the indicators are getting weaker earlier so I don't know how long this strength can last. So, do we need another pullback to regenerate? I think so.
If you compare the two years, you see there was a 10 month consolidation period in 2004 before the S&P 500 made a strong breakout (point A). That breakout led to this year's consolidation which is now in its 11th month.
Chart provided courtesy of www.decisionpoint.com
Things never play out exactly as prior occurrences, but you will notice that the breakout in 2004 came after a higher low was made in October. So the breakout attempt after the August 2004 low failed as the market needed one more pullback to gain some strength for the breakout run in November. Comparing that to the current market, the S&P has got to be close to running out of steam, even if yesterday's action didn't indicate it. A pullback would give the market the strength it needs to move higher. I'd be surprised if it did move much higher without that pullback.
Bonds broke their recent downtrend and we could see a little move higher here. But there will be some resistance near the 50 and 200 day moving averages. That doesn't leave too much room to move. The strong support area down near 110 was never tested and that may be the next target if a rally fails. Bottom line, it looks better but bonds have a lot to prove before getting bullish.
Chart provided courtesy of www.decisionpoint.com
The new AAII Investor Sentiment Survey came out yesterday. Those polled who said they were bullish was 54%, down from 59% last week. The bears are at 22%, slightly fewer than the 23% last week. The 22% is on the low side and is the lowest reading since the summer highs. This is a bit of a negative for the market.
Here is something to consider for next week:
Chart provided courtesy of www.sentimentrader.com
Wednesday is -1, Friday +1, and the Monday after the holiday will be +2. We'll talk more about it next week.
Please check out the Item of the Day in The Gallery. That's all for today. Currently 100% G fund. Thanks!
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