Articles of Interest

Monday, December 1, 2014

SPX, RUT, INDU: Bears Want to Know if We're There Yet, Bulls Want to Know if "Santa Rally" Will Appear in the Title


Let me start off by saying that I hope everyone had a good holiday weekend!  I apologize for the title's verbosity, but I was required by the Stock Market Writers Guild to put the term "Santa Rally" into the first title of a December article.  I don't pay those annual Guild dues for nothing!

Last update again called attention to the 2075 target from October, and SPX finally reached that price point... and reversed.  Bears want to know if this is it, so let's take a look at the evidence.  We'll start with a long-term daily chart of SPX:

 
I know this isn't what bears want to hear, but RSI history suggests this probably isn't the final top -- however, some backing and filling from this zone would be quite reasonable.

On the 30-minute SPX chart, I've adjusted the speculative wave count again.  I realize that I was previously looking for a top in the 2075 zone, and it appears we'll indeed get one -- but after studying all the available evidence (not shown, read: 50,000 other charts), I presently have some doubts as to 2075 being THE top.  That could always change as the structure develops, but a fourth wave looks like the more likely culprit at the moment.


Next up is a look at RUT, which probably still needs a new high to be complete.  This could suggest the fabled Santa Rally, which (and try to follow along here) the market has had every single year, except for the years it hasn't.


Next is INDU's daily chart, which I annotated so many hours ago that I no longer have any idea what it says.  Let's upload it and find out..! 

Awesome, it looks like it agrees with these other charts.


INDU's 5-minute chart notes a couple potential near-term targets (continued, next page):





Also, a quick bonus chart of NYA, though I have no specific downside targets here:




In conclusion, RSI history and RUT both seem to suggest that, while a correction here is quite reasonable, the final highs probably aren't in yet.  I am, of course, alert to the reality that the majority of bulls are currently fat and incredibly complacent after the recent nosebleed rally, so maybe the correction will stretch deeper and be more scary than discussed -- but that notion is simply speculative discussion, and, as of yet, there's nothing in the charts to suggest that conclusion.  All I can do is chart what's there as of this moment, so we'll see how the market reacts to the first targets.  Trade safe.

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