Resilient BULLS hold support, new ATHs soon

End of Week Analysis:

The S&P 500 finished the week down a modest 0.8% but remain within a stone’s throw of all-time highs.

As expected, the rate of gains slowed as we approached last week’s intraday highs and the market is quickly settling into a 3,500(ish) to 3,650(ish) trading range ahead of the Thanksgiving holiday.

Stocks rallied 10% in early November and anyone predicting that rate of gains to continue clearly doesn’t understand how this game works. I still like this market and am anything but bearish, but two steps forward, one step back. That’s how this works. Always has, always will.

Most of the big headlines are already behind us. Investors who are afraid of this spike in Covid infection rates have already sold. Those that wanted to buy the vaccine breakthroughs have already bought. And now everyone is sitting around waiting for what comes next.

Maybe these infection rates moderate naturally without oppressive government-imposed shutdowns. Or maybe we fall back into another round of punishing stay-at-home orders. At this point, no one knows for sure.

While things turn out less bad than feared most of the time, the biggest challenge for this market is prices are already near the highs. That means there isn’t much margin for error. Stocks are priced for a good outcome and any hiccup will send us lower.

Limited upside if things go right and lots of downside if things go wrong. That makes this a poor place to own stocks. I don’t mind holding long-term investments because that time horizon is measured in years, not months. But for anything shorter-term, we need to be careful because the risk/reward is currently skewed against us.

https://cracked.mark...th-this-market/

Keller:

"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria." - Sir John Templeton

My macro process has three key steps: Price, Breadth and Sentiment. While most measures of price and breadth indicate the bull market is in decent shape, the third step of sentiment may be indicating an exhaustion of buyers and, therefore, limited upside.

Price tells you how investors are positioned based on the basic laws of supply and demand. Does demand outweigh supply? Then prices will go higher. If there is more supply than demand, then prices will go lower. Simple.

It's actually not that simple, though, and the markets are indeed a complex system with many headwinds and tailwinds at any given moment! But price is price, and it indicates the aggregate supply and demand in the marketplace.

Even with the recent consolidation in the S&P 500, I still see a medium-term pattern of higher highs and higher lows. The market is in a confirmed uptrend.

Breadth speaks to participation. Improving breadth conditions mean the average stock is going higher, while deteriorating breadth conditions tell you more stocks are going lower than higher. 

While breadth readings can tell you some information on their own, they are of much greater value when you compare price to breadth. If price is rising on improving breadth, that means that more stocks are participating in the uptrend and, therefore, it is more likely to continue. Prices rising on weaker breadth would suggest less stocks joining in the uptrend and is often associated with bull market tops.

https://stockcharts....ustion-437.html

SPX WEEKLY CHART UPDATE

How long can the SPX continue rising with negative divergence of momentum versus price?

For several weeks I've been saying, the SPX could go higher, but might go lower, and without citing again all the pros and cons, but from a momentum perspective, in the 90s, from the peak in momentum in April 1995 until its last lower-high momentum peak in August 2000, the SPX continued rising in negative divergence for 278-weeks to end the last bull market cycle.

Again, to start off this new bull market cycle from 2009 the momentum indicator line peaked in February 2011 and the SPX continued upward with negative divergence for 231-weeks, though most of the grinding higher was over the last 113-weeks.

Similarly, the most recent first peak of momentum in the last cyan highlight was in February 2017, though since then there was a slightly higher peak in December 2019, which is also the highest momentum reading since 1995 - so first peak until now has been 193-weeks and highest reading until now has been 43-weeks.

BOTTOM LINE: the SPX can absolutely continue upward in negative divergence of momentum versus price, AND as the red arrows show, a high peak can still be exceeded, so a UTL break is what needs to be seen before a top is called... watching.

Edited by tsharp, 22 November 2020 - 11:14 AM.

Memo to Bulls: Y'all doing a good job, and just keep it up until Jan 4th when I can  GTH out of all longs.

Memo to Bulls: Y'all doing a good job, and just keep it up until Jan 4th when I can  GTH out of all longs.

 

Memo to Bulls: Y'all doing a good job, and just keep it up until Jan 4th when I can  GTH out of all longs.

For tax reasons?

 

Yep, to pay cap gains tax on April 15, 2022 instead of April 15, 2021.

Also, Biden may not be able to hike taxes for 2021 year, but more likely later on.

Placing ES buy LIMT order 3537

That was weird after the open last night I had a trade on from 3559 and was just placing my new profit stop 3570 and it just dove to my overnight stop of 3561 to only get a 2 point profit.  Think I'll wait for the open now that was irratating but also singling were getting skiddish up here I think!! 

Looking for a short higher still can't believe we had that weird spike lower, nonetheless the good news is that the Dec 3800 calls I sold last Monday at $15 are now down to $5.00 and aren't just trades they are a hold for the upcoming expiration cycle. Think I will just put a gtc profit stop on them at $10 to see how it turns out but with it being a 20 day cycle they should be fine.  Also sold the 3900 calls for $5 and they are now down to $1.50.  They are a hold until they fall under $1.  HAvn't placed any put trades just yet will look for some down spots this week but will be cautious in case we have another one of those bad Decembers lol!! 

And there we go short at 3585 see if its a build or not!