Technical Analysis:

  • Yesterday was peculiar in the price action that unfolded on the S&P 500 (SPX) where price greatly retracted at the close of the day and gave up most of the day’s gains. This is indicating to me that market strength is being used to book recent profits. 
  • Should this happen again today, and more severe in its correction, it may indicate that the bulls are losing a grip on this market. 
  • Oil (/CL) headlines are leading the market higher this morning, with a deal among OPEC countries driving the price of oil through the roof – currently you are looking at a 7-8% rise in oil before the market even opens. 
  • On the volume front, there was a slight decreae on the SPDRs S&P 500 (SPY) yesterday, and currently below recent averages. 
  • Second straight day of price on SPX closing below its 5-day moving average. 
  • Same goes for the Nasdaq (QQQ) as well as the hard sell-off yesterday into the close. 
  • Following a 15-day rally on the Russell (IWM), it experienced its second straight day of selling and appears most susceptible to a larger sell-off. 
  • The last two times there was a massive +10% rally in the Russell Index in a given month, the next month led to substantial sell-offs. December though isn’t known for major sell-offs, in part due to the ‘Santa Rally’ effect. 
  • Lower highs continue to be made on the T2108 (% of stocks trading above their 40-day moving average) and has established lower-highs on each major surge to new highs that occurred in July and again in November. This should be a major concern for traders as the the highs aren’t being made on substantial breadth across the market. Typically I would expect well over 80% of stocks trading above their 40-day moving average when price is at all time highs. Right now it is at 63%.
  • With the election behind us, the market should start to turn its attention to the Federal Reserve and the eventual rate hike that will come on December 14th when the next FOMC statement is released. 
  • If it is anything like last December, it should create some jitters in the market as well as a potential selling catalyst that leads to a significant sell-off. 

My Trades:

  • Sold FB yesterday at $120.84 for a 2.6% profit.
  • Sold NSC yesterday at 104.39 for a 0.4% profit. 
  • Closed ADBE yesterday at $105.87 yesterday for a -1.3% loss. 
  • Added one new long position to the portfolio yesterday. 
  • I will look to add 1-2 new swing-trades to the portfolio today, depending on the direction that the market decides to take today. 
  • I am currently 10% Long / 10% Short / 80% Cash

Chart for SPX:

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