SHORT TERM: this market remains very resilient.
The stock indices opened slightly higher this morning, then spent the first couple of hours basing around the lows of the day. Just past noon, the market starting rising, taking out yesterdays highs in the process. Only the NYA made a new bull market high. At 3:30, however, there was some profit taking, and the market ended the day mixed. This market continues to be very resilient, as it has bounced back from mondays selloff, and wednesday’s NDX selling pressure. The last couple of days might have been caused by end of month window dressing by portfolio managers. Therefore, I am not convinced, as of yet, that this market is heading higher from here. And, I still consider this rally to be a counter trend B wave. I have labeled the hourly charts to reflect both possibilities, nevertheless.
Tomorrow, we have the ISM, Construction spending and the monthly Auto sales. Nothing with that much of an impact, as we enter the closing month of the year. 2006 was a good year for bulls. A bit frustrating in the first half of the year, but it made up for it twice over in the second half. Thus far, it has probably outperformed 2005 and 2004, just looking at the charts. Next year, 2007, should outperform them all.
Technically, the rally in the NDX/NAZ definitely looks like a corrective "abc", with negative RSI divergences on the 15min/60min charts. The SPX/DOW is not quite as clear, but they too have the same negative divergences. It’s still too risky to be long stocks at this juncture. And, I am still using the SPX 1410 level, as a trigger point, to the next EW pivot. The current high remains SPX 1407.89. Bonds continued their uptrend with another solid 1/2 point gain. Crude rose about 50 cents, as its uptrend gets underway. Gold had a stellar day, rising $13 DEC contract, and the gold stocks confirmed by rising strongly. The uptrend continues here as well. Seems everything is rising! Hoping your portfolios are rising in value as well.
MEDIUM TERM: neutral … major indices appear to have completed their uptrends
LONG TERM: bullish.