We are getting pretty close to the end of this move. We are now outside the upper Bollinger band on the daily chart on the SPY and the energy is at 39 – close to being exhausted. The weekly chart is touching the upper Bollinger band and is now at 35 for its energy. I would not be surprised to see a little bit of a pullback at the beginning of next week because of where the daily chart is.
We need to be careful over the next few weeks. As I mentioned last week, we are entering a low volume period in the markets which is susceptible to larger swings.
I still don’t think we will see a massive correction at the end of this move, especially since the market is getting everything it wants and has priced in right now: Low rates, China trade deals, Brexit after the landslide election in the UK, the FED pumping money for Repos, and some pretty good certainty that impeachment is dead on arrival in the Senate. So, it looks like clear sailing barring no major events or news that are not priced in.
Interesting, but not too surprising, we saw the market go up this week. Again, low volume is prone to larger moves. I thought we were at exhaustion coming into the week, but we had a little more way to go. The daily chart is now at 28 which is just shy of total exhaustion. The weekly chart is now at 30, so it has a little bit left to go if it wants. And remember, the monthly chart is in control and is only about halfway through the energy in its uptrend, so we are going higher long term.
What I would not like to see is the market go parabolic over the next week or two to finish the weekly chart move – especially at these levels. That is just a recipe for a pullback the week after. Either a flat week or slow walk higher through the holidays is healthy.