200k plus job creation, upward revision to GDP, and a strong consumer confidence number are strong arguments the Federal Reserve will begin to cut down on asset purchases possibly as soon as this month. These “good news” events should be consistent with risk aversion but the equity markets had other ideas with last Friday’s bullish move. From a technical perspective, there were daily TD Sell Countdown 13’s on the S&P 500, SPY, Nasdaq Composite, and the QQQ. If the 13’s have any meaning, look for the markets to start giving back gains starting today. If there is further upside, the initial prognostication is it will be limited.
S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL
Probably the best chart for the short term now is the 30 minute chart as TD Sequential has carved out definitive support and resistance. Note that TD Sell Setup @9 recorded under TDST Resistance at 1808.36. This has short term bearish implications and more damage can be made if the bears can take the SPX below the 1785.02 TDST Support. Conversely, trading above SPX 1808.36 has bullish implications.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL
The recorded TD Sell Countdowns on the SPX and the QQQ should have significance if the markets begin to act indecisive. That would support the notion the rally will not hold.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BULLISH
Besides being in an uptrend, the bullish element for the SPX is the active TD Sell Countdown, the trend component of TD Sequential. Within’ a trend, the market backs and fills and if the market is ready to revert back to the trendline, then a weekly close under SPX 1798.18 is a clue the process is just beginning. The Dow chart sums up the intermediate picture well. At this point, the Dow just needs to ‘perfect‘ the TD Sell Setup count by recording a price equal to 16,174.51 or higher. It is at that point, potential price exhaustion can be evaluated. Absent of ‘perfection’, a weekly close below 15,961.70 will indicate bearish forces are already taking over.
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Will flip back to neutral with a monthly close under the January price flip level of SPX 1681.55. (updated December 1st)