Stocks confirmed their latest uptrend when they closed above resistance (1435) on Tuesday, December 18, 2012. This marked day 22 of their current rally attempt (that began on Friday, November 16, 2012- after politicians hinted that a deal would get done for the fiscal cliff). It was very healthy to see the major averages break above several key areas of resistance last week: last month’s high, their respective 50 DMA lines, their downward trendlines and the necklines of their bullish inverse head and shoulders bottom pattern. Looking forward, the next area of support is the 50 DMA line while the next area of resistance is 2012 high.
Monday-Wednesday’s Action: Stocks Confirm A New Uptrend
Stocks rallied on Monday during the last full trading week of the year. President Obama and Speaker Boehner appeared to be getting closer to a deal as the ongoing fiscal cliff drama continued. Financials and Housing led the rally which, as you know, are my two favorite sectors in the market right now. It was encouraging to see the S&P 500 defend support near the 50 DMA line. Stocks rallied on Tuesday helping the major averages confirm their latest rally attempts. It was encouraging to see a slew of stocks break out of sound bases and the benchmark S&P 500 close above 1435 for the first time since the middle of October. Technically, the market broke above the neckline of a bullish inverse head and shoulders bottom and above an ascending triangle on Tuesday which confirmed the latest rally attempt. This action is very healthy and suggests higher prices will likely follow. Investors cheered after the White House said they would raise their level from 250k/year to 400k/year to help appease Mr. Boehner.
Stocks opened higher but closed lower on Wednesday after optimism faded regarding the fiscal cliff. Normally, it is not “healthy” to see stocks open higher and close lower therefore Wednesday’s action, after a decent move, appears to be nothing more than an overbought market taking a breather. Healthy data came out of Europe which helped send the euro surging to new multi-month highs. In the US economic data was mixed. November housing starts hit an annualized rate of 861k which missed the Street’s estimate for 875k. However, the data was adversely affected because of Superstorm Sandy. Meanwhile, building permits topped estimates rising to 899k, above the forecast for 876k. Technically, the Nasdaq suffered a death cross (50 DMA line undercut the 200 DMA line) which is normally bearish.
Thursday & Friday’s Action: Deal Or No Deal Regarding Fiscal Cliff?
Stocks were quiet on Thursday even as investors digested a slew of economic data. Q3 U.S. GDP jumped to an annual rate of 3.1% which easily topped the earlier estimates of 2.7%. Existing home sales surged 5.9% to a seasonally adjusted rate of 5.04 million units which would have been stronger if Superstorm Sandy did not occur. The Labor Department said jobless claims fell 17k to a seasonally adjusted 361k in the second week of December which bodes well for the jobs market. After Thursday’s close, Speaker Boehner canceled the vote in the house for Plan ‘B’ which sent futures plunging over night. Stocks fell on Friday as fear spread regarding the fiscal cliff.
Market Outlook: Uptrend
From our perspective, the market is back in an uptrend which bodes well for the market and the economy, by extension. As always, it is extremely important to be flexible in your approach and change when the facts change (Thank you Mr. Keynes). For those of you that are new to our work, on October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19. Since then, stocks have gone straight down and a lot of technical damage has occurred. Then we put out a note on Friday, November 16, 2012 (the exact low for this move) titled, “Time For A Bounce.” Stay tuned as we will continue to keep you one step ahead of the crowd. As always, keep your losses small and never argue with the tape.
Become a Client
Stocks Erase Gains On Fiscal Cliff Woes
Friday, December 21, 2012
Stock Market Commentary:
Stocks confirmed their latest uptrend when they closed above resistance (1435) on Tuesday, December 18, 2012. This marked day 22 of their current rally attempt (that began on Friday, November 16, 2012- after politicians hinted that a deal would get done for the fiscal cliff). It was very healthy to see the major averages break above several key areas of resistance last week: last month’s high, their respective 50 DMA lines, their downward trendlines and the necklines of their bullish inverse head and shoulders bottom pattern. Looking forward, the next area of support is the 50 DMA line while the next area of resistance is 2012 high.
Monday-Wednesday’s Action: Stocks Confirm A New Uptrend
Thursday & Friday’s Action: Deal Or No Deal Regarding Fiscal Cliff?
Stocks were quiet on Thursday even as investors digested a slew of economic data. Q3 U.S. GDP jumped to an annual rate of 3.1% which easily topped the earlier estimates of 2.7%. Existing home sales surged 5.9% to a seasonally adjusted rate of 5.04 million units which would have been stronger if Superstorm Sandy did not occur. The Labor Department said jobless claims fell 17k to a seasonally adjusted 361k in the second week of December which bodes well for the jobs market. After Thursday’s close, Speaker Boehner canceled the vote in the house for Plan ‘B’ which sent futures plunging over night. Stocks fell on Friday as fear spread regarding the fiscal cliff.
Market Outlook: Uptrend
From our perspective, the market is back in an uptrend which bodes well for the market and the economy, by extension. As always, it is extremely important to be flexible in your approach and change when the facts change (Thank you Mr. Keynes). For those of you that are new to our work, on October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19. Since then, stocks have gone straight down and a lot of technical damage has occurred. Then we put out a note on Friday, November 16, 2012 (the exact low for this move) titled, “Time For A Bounce.” Stay tuned as we will continue to keep you one step ahead of the crowd. As always, keep your losses small and never argue with the tape.
Become a Client
Here are more articles you may like
September 4, 2024: Another Leg Down
Sellers showed up yesterday (9/3/2024), and if we weren’t convinced the recent rally attempt had
August 30, 2024 — So Long for Now, Semiconductors
Although $NVDA had a good earnings report, the stock price fell, and the $SMH and
Podcast: Swing Trading
Over the last month, our guests Michael Lamothe and Dennis Wilborn have told us a
Adam Sarhan
Claim Your Free Guide Today
Give us your email and we will give you the tools to change your life.
FREE 7 DAY EMAIL COURSE
Learn about Early Entry Points & much more...
© ChartYourTrade | Contact us: website@chartyourtrade.com
Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.
Terms of Service