Stocks rallied out of the gate on Thursday morning as the trek to 20,000 was on, but for a third straight day the Dow got within about 50-points of the emotional milestone and backed off. It closed at 19,852, still up 60-points on the day but the bulls have been reluctant to push further... or else the bears are willing to push back at that 19,950 level.
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We saw 0.3% to 0.5% gains across the board, except for the I-fund which continues to be held back by the strength in the dollar.
Next week we start the strongest 2-week period of the year in the stock market historically, but what can we really expect after the 5-week run we've seen leading up to this point? In the last several years the market has actually flip flopped the gains and losses the week before and the week after Christmas. When the week before was up, the following week was down, and when the week before was down, the following week was up. I supposed the positive bias will be around since the bears tend to hibernate the last two weeks of the year, but again, what can we really expect?
The SPY (S&P 500 / C-fund) remains in its rising trading channel above all support. The bulls are showing signs of tiring, but not of giving up.
The weekly chart shows that this week's high hit the top of a longer-term rising channel and has so far backed off a bit. It doesn't have to go down from here since the channel is rising, but clearly the path of least resistance appears to be down in the short-term.
The DWCPF (S-fund) broke down from one trading channel on Wednesday, but that angle of incline was unsustainable. Now the bottom of another parallel channel is being tested.
The EFA (I-fund) closed off its lows but still ended with a loss on the day as the dollar shot up again.
The dollar (UUP) reached toward the top of its rising trading channel early on before backing off a little by the close. A new gap was opened but the open gaps on this chart haven't been overly concerned about getting filled lately.
The AGG (bonds / F-fund) is still sans bounce as it resumed its downtrend after a couple weeks of moving sideways. At some point bonds will post a strong relief rally, but it will likely be when most have given up on one. That may be getting close as this chart deteriorates even more.
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Thanks for reading. Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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