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MARKET WRAP UP 12/07/10

The S&P 500 made two-year highs within the first several minutes of trading this morning, before drifting lower the rest of the session to finish barely up 0.05% to 1223. Despite the news headlines about the fresh highs, the action smacked of a continued consolidation of last week’s upside break out of the November pullback. While many are taken aback by the intraday reversal and pointing to the possible bearish “shooting star” candlesticks printed across the leading indices and sectors, I view them more as unidentified flying objects at this point. The overarching trend remains firmly higher, but a few more days of frustrating and choppy price action would likely set us up perfectly to finish out the year in a bullish holiday manner.

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MARKET WRAP UP 12/06/10

Today is a pretty good example of the type of consolidation that you would expect to see in a broad market uptrend. After we closed out last week with several impressive sessions, a short-term rest was not only expected but needed. While the Nasdaq Composite Index finished slightly green, the S&P 500 closed down today 0.13% to 1223. However, we failed to see any aggressive profit-taking, which is a sign that the big money is content to remain in their long positions. Even at the lows of the day, many key individual names were still acting very today. In other words, the bull run that began in early September is sticking to the script.

We may not get them, but a few more days of this type of price action would be a gift to swing traders looking to load up their portfolios into New Year’s Eve. Going forward, the key is to focus on the very best setups, as there are surely impressive gains to be had. Identifying where fund managers are chasing appears to be the name of the game as we head down the final stretch.

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NOTE: Sorry about getting cut off at the end of these videos. The YouTube upload process is problematic for my screen capture program.

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[youtube:http://www.youtube.com/watch?v=ixib2cp1Z0E 450 300]r

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MARKET WRAP UP 12/01/10

Stocks got off to a feel-good start to the new month, as the S&P 500 closed up 1.64% to 1206. The morning move higher was never aggressively faded, and actually strengthened slightly as the day progressed. Breadth was very strong, and volume was solid as well. Moreover, the S&P broke above what had been a tight consolidation pattern over the past few weeks, and recaptured the 20 day moving average.

With the small cap and transportation stocks in excellent technical shape, the bulls have earned the right to be in control of their own destiny. I would not be surprised to see tomorrow be a digestion day. However, I’ll be keeping a close eye to see how well the 1200 level on the S&P can act as support.

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MARKET WRAP UP 11/30/10

For the second session in a row, stocks gapped down hard at the open, only to quickly find a bid before chopping around until the closing bell to finish down 0.61% to 1180. While both the rising 50 day moving average and the key 1173 level continue to hold on the S&P 500, the bulls would be foolish to complacently assume that they could do no wrong. Falling in love with the idea of being “the comeback kids,” while consistently trying to dig yourself out of a hole will eventually end badly. At the same time, with the transportation and small cap stocks holding up impressively and outperforming, as well as many enticing individual setups, the bears do not seem particularly eager to take the lead either.

In essence, the two weeks of consolidation to close out November has everyone wondering whether it is of the bullish or bearish variety. My technical indicators still indicate that the bulls deserve the benefit of the doubt. With that said, trying to discern a choppy range is the equivalent of stepping out of the shower and applying too much heavily medicated Gold Bond Body Powder. Is the burn healthy, constructive and natural? Alternatively, is the sharp burning sensation merely a harbinger of terrible things to come?

Indeed, only time will tell.

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MARKET WRAP UP 11/29/10

This morning saw a very strong move lower in the broad market down to that 1173 level on the S&P 500, which marked the recent low on November 16. Beyond that, we saw one of the basic and ubiquitous tests in all of technical analysis, as standardized as the SAT, a test of the 50 day simple moving average. Keep in mind that moving averages are best used as reference points, rather than places where you should automatically turn bullish or bearish. What you are looking to gauge is how quickly and forcefully the market reacts, if at all, to a given moving average. In the case of the 50 day moving average on the S&P, you are talking about such a widely used reference point that many market players who despise technical analysis still keep tabs on it.

Today, the test of the 50 day moving average was a success for the bulls. We broke below it briefly, scaring out many traders who used it as a place to automatically sell (a mistake, as mentioned above). At the same time, the bulls swiftly came in to buy within the first ninety minutes of trading. For the duration of the session, stocks drifted higher, as we closed down just 0.14% to 1187. The fact that we quickly breached and then bounced off of the 50 day without ever looking back the rest of the day is a real plus for the bulls. In many respects, today can be seen as the quintessential “shakeout.”

Nonetheless, if the bulls show no follow-through in the coming days, then the choppy range is likely to continue. Indeed, it can be argued that the bulls must capitalize on today’s intraday reversal, else lose the initiative and slowly give the baton to the bears.

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