Today’s action was quite peculiar. The Dow and S&P tacked on decent gains and the S&P closed above the 1270 resistance level that we have been watching very closely. Breadth in the S&P and Dow were positive and volume was sufficient to call it an accumulation day and a technical achievement. The challenge we have in cranking up the tunes and starting to rock in the New Year, is the S&P and Dow’s close neighbor, the Nasdaq, struggled all day. Breadth was poor and after recent favorite Apple (APPL) was served with 2 downgrades, the tech heavy index simply couldn’t get moving. In addition to a lagging Nasdaq, we had the semis struggling today also. Something we don’t like to see heading into possible new high ground. The Nasdaq 100 was particularly weak with only 36 advancers to 64 decliners which is very surprising given that the SP500 is hitting new highs.

In a cautiously optimistic tone we suspect that today’s strange action may have something to do with the index reshuffle that takes place after tomorrow’s close. On another bullish front, the metals experienced some pain today which is good considering this is not the place we want to see leadership. We suspect we may see some strong action in Google (GOOG) tomorrow prior to its addition into the Nasdaq 100. Should this occur, the Nasdaq index may right itself very quickly. After the close, Amgen was trading up on news of an acquisition which may be enough to start things moving.

Despite this peculiar action we can not discredit the strong technical environment we are currently in. The S&P 500 has technically broken resistance today and the Nasdaq is extremely close. After the Dow’s move today, the larger industrial index may see new highs soon too. With all this technical action, the environment remains ripe for a year-end rip to new highs.

RevShark