Coolhand's Market Analysis

What started out as a choppy day of trading for most of the session, ended with a modest sell-off towards the close. The S&P 500 finished flat for the day while the Wilshire 4500 dropped a relatively modest 0.38%. The I fund was helped by a weak dollar and tacked on a little over 1%.

That end-of-day sell-off may have been due to some traders going flat ahead of the FOMC rate hike decision tomorrow afternoon. The rate is almost certain to stay at its current level, but the accompanying language contained in that decision will be equally important.

Prior to the afternoon release of that policy statement the market will be digesting earlier releases of the PPI, Core PPI, retail sales, and business inventories data. The Senate may also be voting on the tax cuts package, which while expected to pass, is still an item being monitored closely.

The Sentinels continue to show a mixed picture. Here's the charts:



NAHL is now sitting on its 6 day EMA, while NYMO is still on a buy, but also close to its 6 day EMA. Not much of a tell here.



Internals look okay with NAHL on a buy and NYHL on a sell.



TRIN remains on a buy, but TRINQ spiked today and flipped to a sell.



Onward and upward for BPCOMPQ, which remains on a buy.

Officially, the Seven Sentinels remain on a sell as NYMO never confirmed the last buy signal from 2 weeks ago, but given the lack of downside pressure it's possible that signal may eventually prove valid. But after a long run higher we may be seeing a complex top being formed as a result of window dressing coupled with an expected Santa Clause rally. Many have missed a good portion of these gains since the rally began on 1 September so it's not a stretch that some panic buying may be occurring. I certainly won't bet against the trend, but with sentiment so bullish it's difficult to throw caution to the wind here. But each of us has to determine our individual risk tolerance, which is based on multiple factors. I remain in cash myself and plan to hold that position for now.