Thursday, December 19, 2013

Yesterday’s FOMC statement had everything the bulls wanted to hear and that is Ben’s mastery at work – setting expectations. With the markets initially dropping when the $10 billion monthly taper was announced, the Fed statement was all bullish especially with the forward guidance that zero interest rate policy (ZIRP) will stick around even if the Fed target of 6.5% unemployment is met. Now the taper is now news, there is high probability the December seasonality will favor the bulls through the end of the year.  

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S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH

In the event of a bull trap, switch to bearish with a close below SPX 1781.02. Neutral with a close below 1792.Image

Since the SPX 4 hour chart has been operating in a TD Setup vacuum for the past two months, the 2 hour chart will be drawn alongside the 4 hour chart. When recorded, the 2 hour TD Setups does a decent job of warning of a potential turn when a “9″ shows up. Expectations are for this rally to continue but will grow wary if the SPX should fall under 1800.

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

Flip to bearish with a close below SPX 1781.02. Flip to bullish if SPX holds above 1800. Image

Yesterday’s SPX rally not only price flipped bullish but took out the TD Propulsion threshold level at 1807.42 from the lows in a single bar! TD Propulsion is the sister indicator to TD Trend Factor. Unlike TD Trend Factor targets, when projections are made when there is a 5.556% selloff, TD Propulsion targets are measured when there is a 23.6% Fibonacci retracement. The recent TD Propulsion statement gives several points to the bull case that the December bullish tendency will matter through the end of the year. If the current TD Sell Setup is of the quality type, there is a decent chance the TD Trend Factor at SPX 1820.59 will be taken out as well. 

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL

A bullish price flip will occur with a weekly close above SPX 1804.76. However, that is more indicative of a wobbly market than a bullish one. (updated December 16th)

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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)

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