Tuesday, December 31, 2013

Last trading day of 2013. What is remarkable about the most disbelieving bull rally in the world is how it shrugged off various bearish technical signs – various Hindenburg Omens, or the Three Peaks and a Domed House pattern. Even Tom DeMark’s triple daily/weekly/monthly convergence only produced a mild 7.5% decline last May. Adding to yesterday’s post on a positive 2014, how we get to a positive number is not guaranteed to be smooth. Another perspective on that topic is from Brent Leonard. Since receiving his CMT by tracking a full range of sentiment indicators for nearly 20 years, Brent has never seen so many extreme readings and made some observations as a result of these extremes. For those who want to read on, click the link below for the numbers, and the nested link in his blog for the article: http://mktsentiment.blogspot.com/

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

Switch to bearish with a close below SPX 1826.82Image

The SPX drew down just enough to render the TD Sell Setup inactive. The official outlook has switched over to the neutral side. Any additional upside can occur since the daily SPX has not finalized a ‘perfected’ TD Sell Setup yet. However, to align with the daily SPX, any gains should see limited upside. The projected bearish outcome is unknown until we get the first week reaction of 2014. The major takeaway is caution. 

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

Flip to neutral with a close below SPX 1833.32ImageImageImageImage

If the SPX wishes, it is allowed to make another high if it ‘perfects’ the final 9 count with a print that is equal or exceeds SPX 1844.89. If instead, the close of the SPX is below 1833.32, we’ll start looking for topping conditions. The other indices are more or less aligned. The Dow is nested between last Friday’s TD Sell Countdown @13 and today’s TD Sell Setup @9. The QQQ has recorded a reverse prior flip while the RUT finished a full TD Sell Setup. So the markets are dialed in for some choppy to lower price action in the near future. 

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

Switch to bearish with weekly SPX close below 1805.09. (updated December 30th)

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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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One Response to Tuesday, December 31, 2013

  1. One thing I’ve learned in this rally is that there is a reason why IBD and Vectorvest have been around for several decades… their systems work in any market. In some markets they don’t work as well as others, but if you follow them, you’ll eventually win big.

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