T-Minus 1 Day to Christmas Eve & SPX Would Have Us Believe…

SPX would have us believe that it could actually do the rough opposite of what it did last year during the 2018 Christmas Eve massacre, when people were out doing last minute shopping, were out reveling, sipping or gulping cocktails, were out cutting each other off in traffic in a final frenzied display before peace and goodwill toward their fellow man temporarily settled in with dusk, were putting on really bad sweaters and readying for their family gatherings on this holiest of nights…

People were doing stuff like that but the machines were doing a market tank job in preparation for a head spinning upward reversal on the next trading day (as with Christmas Eve, also not well attended by humans).

This is not technical analysis so much as a story. A story of an oversold market that rode its EMA 10 all the way down last year as it is doing on the way up now in an overbought condition. Friday’s gap up, dangerous as it looks is a classic looking thing (yeah, it was Op/Ex Friday, but whatever). It looks like the first obvious sign of mania, assuming this mess is not reversed here and now.

SPX is not as overbought by its distance from the SMA 50 (green) as it was oversold last Christmas Eve. But boy, if that was a manic footprint on Friday (bears want it to be a classic head fake, Island Reversal type thing) it sure could get there. There’s some volume kicking in and there are the overbought momo indicators (which can get more so). If the ADX (yellow) line rises to level it was at a year ago at 35 the manic bull trend will be as strong as the manic bear one was then. It would also, by implication, be ready for blow out and reversal. But again, it’s not TA; it’s a story. A quaint Christmas story. Fa la la la la.

We did more actionable work in NFTRH 582, including refined measurements and potential outcomes for the S&P 500 in 2020 using a weekly chart. But sometimes I like to just mark up a daily chart with words and see if the market is listening. So far, it appears to have been listening since we established the break through the Bull Turnstile. But it would be almost too perfect if a Christmas Eve massacre close-out actually plays out.

It may be hard for we grizzled veterans to realize, but there is a whole new batch of Millennials and Trumpies in this market that were not participating even in 2008, let alone 2001. A lot of people have not experienced mania before, at least viscerally.

Click the chart for a larger, clearer view…

spx

Just because I’ve written the word “massacre” so much over these last weeks I can’t get this one out of my head. Back then this was needed to get those stupid classic and progressive rock stars out of our (well, my) heads, wearing robes and costumes being blown by wind machines as we stood like lemmings at the alter of false godz. Or something like that. Ramones were like a cattle prod. Texas Chainsaw Massacre…

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