Ok, this last week on the markets even though we were red, it was basically just a non-event. S&P 500 and Small Cap look like the bull flag breakout has formed a mirroring flag right on top of the last. Not sure I’ve seen this pattern before and not sure what to make of it. The International formed a Pivot High and a Pivot Low in the same week and basically has done nothing. But yet the I-fund is still the strongest of the 4 indexes we follow. Bonds? They once again faded lower showing no signs of life.
Next week will be the first full week under the Trump administration. So what do I expect? Absolutely no clue whatsoever. I think for the most part that the business world thinks that he is going to be good for the economy and stocks should go up. That would be good for us also because our TSP accounts would grow. Trump himself has never filed bankruptcy, but 6 of his companies did file and all those companies that supplied goods and all those employees that worked at those places got raped. You can read that for yourself here at Bankruptcy. So how will he run the country? If you love him, he will be great. If you hate him, we are in deep do-do. Honestly, only time will tell. I have no opinion except that if the markets run, I hope the charts keep me in, and if they tank, I hope my charts get me out in a timely fashion. News, chatter, and gossip will not be part of my decision making.
The S&P 500 took 14 trading days to break out of that lower flag. It has now been 11 days since the upper flag has formed. 3 weeks of trading days is 15, so I think a break in one direction or the other happens at least by the end of next week. The DMI is neutral and has a negative look. Volatility is still low and looks good. 50 day moving average is still climbing, so there is nothing to do here but watch and ride.
The Small Cap is almost a mirror image of the S&P 500 and the only real difference is that the DMI is negative versus neutral. Even though volatility doesn’t show on this chart, I can tell you it is the same as the S&P because you can always check it using the IWM index. A breakout in one direction or the other is due here soon.
The International index is still holding and running the short term uptrend. Currently it has paused and is just waffling up and down making very tight pivot high and pivot low structure. DMI is positive and volatility is low. Technically speaking, the International looks better chart wise that the S&P and Small Cap. The only negative you can take away is that price is closing in on that major overhead resistance. The other thing that concerns me is that I can see that a monthly buy signal is likely to fire here at the end of january and here we sit at that overhead resistance. I will have to follow the lead of the chart knowing that the daily and weekly have already fired buy signals. It will be interesting to see what happens here the next 7 trading days of January.
Bonds reversed again lower and there is just nothing to like here at the moment. I actually thought that a daily buy signal might be fired here last week, but it was not to be. What did form is a low pivot high on the weekly chart which created a long term downtrend line that now shows on this chart. DMI and volatility are negative.
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