The Rising Price, Narrowing Range Red Flag Warning
What Monday’s Action Tells
You
The NYSE volume speaks for itself at 921
million
yesterday. The major indices traded down in the afternoon, as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1204.92, -0.4%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 10,776,
-0.5%, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.3% and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) -0.4%.
In the sectors, the
(
OIH |
Quote |
Chart |
News |
PowerRating) was red
at -2.5%,
followed by the
(
SMH |
Quote |
Chart |
News |
PowerRating) at -0.9%. The RTH, +0.3%, and XBD were small
green,
while the BKX and CYC were in line with the major indices on the
downside.
The last trading day of the year is Friday,
but
the SPX is entering this week with a year-end +11.4% advance off the 10/25
lows
of 1090, so the Generals just have to hold price into year-end and maybe
mark-up
their strong stocks where they can in order to have a decent year. The best
case
on the upside would be if they can make it a double-digit year for the SPX,
which means 1223.
This is the tenth week of the major index
rally
off the 10/25 low and has become a rising wedge as price rises and range
narrows. The
(
SPY |
Quote |
Chart |
News |
PowerRating) made a 121.36 high yesterday, closing at 120.52 and
above
the rising five-week EMA which is now 119.71, so the status quo remains
until
that relationship changes. The 15-week EMA is down at 116.88 with the
40-week at
113.15, which highlights the extended price rally. The daily chart indicates
a
downside resolution in the rising wedge, perhaps after any price push this
week
and the first week of January. A negative divergence in the 5 RSI has
developed since the 11/17 119.14 high (1). Short-term traders should work
against the 20-day EMA which is now 119.57.
A significant percentage of trading profits
in
place from the initial price retracement and time zones of 1061 and 1090,
then
the 1145 and 1161 continuation levels will be taken on a scale-up basis into
any
year-end and early January price strength, especially the 1220 – 1260
zone.
Have a good trading day,
Kevin Haggerty
