This market is definitely not for the faint of heart, but if you got the guts or stomach, you had a good week last week. The S&P 500 was up 3.44% this week and wiped out 16 days of loses and sideways moves in just three days. During this 16 days, I bailed out on the market on the 16th of November, two days later than I should have and then I was back in the market 6 days later on November 22nd. The getting back in looked a little shaky at first, but it was the right call. What we will happen next? Wouldn’t it be great to see the future and anyone who thinks they know, is really just guessing. With that said, let’s see what the indexes are telling us this week.
We finally broke through the 1200-1178 channel that began the 17th of November and screamed up to the last resistance line at $1219.80. We have been here before on November 4th and that lasted 5 days before it was rejected and south we went. What needs to happen here is for the S&P to hold above $1219.80 and put some distance away from it. The RSI is above 50 and rising, and the MACD is just now crossing over. All indications at this moment in time is that we are heading up. By all indications, this is the beginning of the next leg up. The next question is, do the rest of the indexes agree?
Above we have the Small Cap, NASDAQ, and the Dow 30 daily charts and you will see that yes, they all agree with the S&P 500 and we do not fight a trend. The Small Cap and NASDAQ are hitting 52 week highs the DOW 30 is not far behind. All three indicators are above the last line of resistance and if you really wanted to pick at something, it would have to be volume. Volume is just a little below average and what we would really like to see is conviction with higher than normal volume. But like I said before, we do not fight a trend and I will ride it as long as it is running.
Even the European index is on the move the last three days. A reversal appears to be in progress but knowing what I know about Portugal and Spain, I would be hesitant to put money here. If something bad happens here, it will affect our markets to, but it will not be as bad as taking a direct hit like with this index. Use caution here.
TSP distribution: G-fund 20%, C-fund 40%, S-fund 40%
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