My technical thoughts. COB the S Fund is above all the major SMA’s (5, 10, 20, 25, 40, 50, 80, 100, and 200) which would indicate they are overbought. As a result, all the major SMA’s (10, 20, 25, 40, 50, 80, 100, and 200) have continued to drift upward over the last month. Additionally, the short term and long term division of four (5/20, 25/100, 50/200) are positive pointing to overall uptrend’s in the markets. However, the midterm SMA’s (10/40, 20/80) have yet to acknowledge the uptrend, but the gap between these divisions has continued to close in.
My gut thoughts. The stock market seems to like QE3 but doesn’t like this fiscal cliff nonsense, and I don’t see that changing anytime soon. I suspect they will offset each other and the market will remain flat until the fiscal cliff is fixed and start to decline as we get closer to Christmas.
S Fund is currently at $23.63, with an all time high of $24.46. That gives us 3.5 % of upside before we hit all time highs.
My seasonality thoughts. December has a notorious Santa rally; however, next week is traditionally the worst week for December. December 31 is also been down almost every year the last 10 years, which I believe in part has to do with the “Dogs of the Dow” players.
Currently I’m thinking the S Fund is overbought because it is over all the major SMA’s, next week is traditional the worst week of December, and the fiscal cliff will not get fixed until last minute and will start to effect the market a few days from now. We’ll see what happens, but I’m thinking I might pull the trigger and get out Friday or Monday for about a week and try to get back in a few cents cheaper and pick up a few extra shares. If I do get out though I only plan to stay out about a week as I still think long term we’re in an uptrend and believe in the Santa rally. Additionally, I believe this fiscal cliff thing will get fixed it will just be last minute.
Thoughts?????
