Santa has finally arrived as the markets bounce from support levels we noted in NFTRH 374. Surprising? Not in the least. This low volume rise makes the market look like a festive holiday balloon freshly filled with helium. Assuming the bearish plan is still the driver, levels to short (if you are a trader) or take caution are noted below. Also noted, as usual, are the parameters to the less favored bull scenario.
Initial resistance on the Dow comes into play at the cluster of moving averages and then the channel top, which is a limit to the intermediate bear case. MACD, RSI and the AROON daily trend are all down.
SPX targets 2060, where there is moving average resistance and a short-term trend line. Then 2093, with a break above 2100 the limiting bear parameter. Panel indicators all negative here as well.
NDX is pretty clear as well as it goes through its sideways channel. Panel indicators negative, with MACD a hair away from going red.
When thinking about the monthly chart of SPX (with a bearish ‘Cap’ on its head), the Transports’ breakdown, the lack of seasonal leadership from the Small Caps and overall poor market breadth, I continue to give the intermediate benefit of the doubt to the bear case.
I covered SPX and RUT shorts near the support levels we had noted last weekend, and held the LRCX short. While I have a few bull positions, I am mostly cash and had hoped for a holiday lift. Now it is here and it will either be an opportunity to prepare for resumed bearishness at the above parameters or as has happened before in this bull market, a negation of some wonderful bearish signals. As of now, the bears are in control, Santa or no Santa.