Sam reviews the core markets and the periphery to see how things are aligned heading into the week.
You’ll notice that Sam refers to his proprietary premium indicators, the TrendOscillator Pro (TrendOsc) and HiLo Pro. For more information on Sam’s true momentum indicators and how to apply them to your trading, visit the link here or reach out to our support staff at [email protected].
Quiet trading last week with the usual holiday drift into Friday.
Most things remain about the same as where they were last week, but some progress has been made.
Bulls, for the first time in a very long time, have a bullish crossover on SPX daily TrendOsc. While this is still not fully correct as both lines are below 50, the bull crossover is step one in making major changes to the structure.
The major thing for this upcoming week is to be aware of and appreciate the risk to reward being presented by the market at these levels.
All indexes start the week at major resistance levels with a VIX near 20, support.
While almost all signals are still aligned for bulls, we do want to understand the
amount of meat left on the bone is limited at these levels until we either see a deeper pullback (H50 SPX) hold or we see a confirmed breakout above D200.
Remember that even on a continued bounce to our moonshot target of 4180 SPX,
which would be about 4-5% higher from here, the market would still have a pattern of lower lows and lower highs. The biggest bounces happen in bear markets.
So… what do bulls have now?
• Weekly momentum crossovers on many, many key symbols, and indexes. (YES)
• Large positive momentum divergences on many key symbols. (YES)
• Dollar falling with structural damage. (LIKELY YES)
• Bonds attempting to bottom. (LIKELY YES)
• Rotation from winners to losers on solid breadth. (YES)
• VIX and internals generally positioned for bull case. (YES, BUT LIMITED)
• Seasonality into end of year. (YES)
• Offsides over positioning by bears in short trades. (LIKELY YES)
Whether we believe the rally or not is irrelevant… the setup is there for bulls to try for a year end melt up in the indexes.
We want to know our levels (found at the end of the report) and continuously check
our work on structure and momentum as days pass, but for now bulls have a lot here.
Moonshot target of 4180 SPX remains in play.