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SPX: Bullish Holiday Theme

SPX is following the common bullish holiday theme. What matters is the reaction after the holidays.

SPX Technical Analysis:

Weekly Time Frame:

  • Unquestionable positive reaction within a "ferocious" bull market.
  • December's low is clearly a new swing low
  • Going forward (weekly time frame) the odds favor a move towards the upper Bollinger Band and trend line resistance in the area of 2110.
  • But even if it is not expected for the immediate time frame (extremely bullish seasonality) a pullback towards the highlighted target box could be in the cards followed by at least one more up leg.

SPX Weekly Chart
Larger Image

Technical reasons for a pullback:

  • CPCE is displaying readings close to extremes (Too many bulls)

CPCE Daily Chart

  • NYSE Adv-Dec Volume is displaying negative divergence (Though still positive)

NYSE Advance-Decline Volume

However, in my opinion, despite the negative divergences, if not erased it will become a concern in January, so far "The Positives" prevail "The Negatives":

  • McClellan Oscillator is displaying a breadth thrust. Still plenty or room to the upside before entering the overbought zone

NYSE McClellan Oscillator Chart

  • 10 dma of the NYSE ARMS Index is also far way from overbought readings:

NYSE ARMS Index 10-Day MA

As mentioned above the negative divergences, such as the one that is showing the NYSE Summation Index, remains a concern. In addition it has not cancelled yet the Sell Signal.

NYSE Summation Index Daily Chart

Daily Time Frame:

SPX ended yesterday with a Spinning Top at a new ATH after a huge 5 days rally. Obviously there is "indecision". Could it be a signal of the beginning of a pullback? The answer is straightforward as yesterday's gap, if this is the case, has to be closed today (Exhaustion gap).

If the gap were closed, as can be seen in the daily chart, with thin air below, the support zone which has a range 2050 (20 dma) - 2033 (10 dma) could come into play.

But given the bullish seasonality (A significant decline this time of the year is almost impossible), it will be more reliable to wait for the market response next Monday.

SPX Daily Chart
Larger Image

I want to wish Twitter/StockTwits and web site followers (And everyone else) a wonderful Christmas


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