Santa Claus Came to Town
The following is an excerpt from the December 22, 2011 blog for Decision Point subscribers. CLICK HERE for a free trial.
It appears that Santa Claus has already come to town, bringing with him a nice rally off of the mid-December low. The S&P 500 opened up and stayed up until the close. The NASDAQ recovered today from its major price decline yesterday as many of the tech stocks that got hammered yesterday probably benefited from some bargain-hunters today.
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STOCKS: Based upon a 12/05/2011 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a SELL signal as of 8/17/2011, so our long-term posture is bearish.
We saw more rally follow-through today putting price close to resistance at the top of the triangle formation. We had a positive PMO crossover that signals there is positive momentum behind this rally despite diminishing holiday volume.
The line chart shows that as far as closings are concerned, an upside breakout has already occurred.
The CVI remained somewhat overbought for the third day in a row. The STVO continues to rise and is somewhat overbought now too.
The STO-B and STO-V have moved through neutral and are heading toward overbought territory, but are not there yet.
The ITBM and ITVM had positive crossovers today.
The McClellan Oscillator chart reveals that the oscillator has broken through a declining trend that it has been in since the October top. Also positive, the 5% and 10% indexes are rising and are neutral. The Summation Index which turned up slightly yesterday and continued higher today, has now put some distance between readings.
Bottom Line: The market is rallying and is now coming up against resistance at the top of the triangle formation. The rally has made our short-term indicators slightly overbought. There is room for them to get further overbought, so a sustained rally or upside breakout could certainly be supported. The line chart of closing prices already shows a breakout, so Santa seems to have set the stage for an even more merry market.
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DOLLAR: As of 11/9/2011 the US Dollar Index ETF (UUP) is on a Trend Model BUY signal.
The dollar rose again today and continued to remain above support in the bearish ascending wedge. Of concern is the PMO, which topped awhile back and is still falling fast toward a negative crossover with its EMA.
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CRUDE OIL (USO): As of 10/27/2011 United States Oil Fund (USO) is on a Trend Model BUY signal.
Oil continues to rally off of the triangle support line that it gapped up and away from after executing the double-top decline. The PMO has turned up and is headed for a positive crossover.
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Technical analysis is a windsock, not a crystal ball.
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About Erin Swenlin Heim
PO Box 7340 Redlands CA 92375-0304
eheim @ decisionpoint.com
http://www.decisionpoint.com/
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