Will Next Week Show Us Where the Market is Headed?
Once again, last week was an important one technically in the markets as KEY, overhead, declining tops lines and lateral price-level resistance were tested or got close to being tested. The shortened Thanksgiving holiday week saw the SPX, Transportation, and Russel 2000 indices all press near their declining channel-tops resistance going back to the November-December 2001 highs.
Friday’s shortened session showed some resilience despite a nearly $3 loss in heavily weighted AAPL, as the rest of the market leaders seemed to mark time. That’s a positive technical occurrence.
Retailers, housing, solar and select biotech groups were seen as market leaders last week. The technicals were bullish in terms of advance/declines and up/down volume, as they generally confirmed the rally we’ve seen since the October lows.
We are now nearing a normally bullish time frame for a possible extension of the recent run via a “Year End” or “Santa Claus” rally. However, since the S&P 500 has already run over 500 points since the mid October lows, we just may have experienced that effect earlier this year.
The McClellan Oscillator is somewhat extended but certainly not extremely overbought at +71, and the VIX volatility indicator at 20.50 is also not yet near the extreme readings we’ve seen in past markets. This would indicate a possible extension to the current rally phase before a more important pullback retest takes place.
Next week could be one of the more important weeks this year as it may determine the market’s direction for the next few weeks. Stay tuned into TheTechTrader.com for more details in the weeks ahead and remember “Trade what you see NOT what you think”. TheTechTrader.com
Harry Boxer, President & Founder
“Trade what you see, not what you think.”