There is no much change on the daily chart. SPY remains overbought with a few sentiment indicators showing excessive bullishness and breadth waning. The VIX is trading at low levels and in a long-term support zone, the CBOE Total Put/Call Ratio ($CPC) shows excessive bullishness and the NYSE AD Line has yet to exceed its November high. Despite these potential negatives, there are simply no signs of significant selling pressure. With yearend approaching and seasonal patterns largely bullish, stocks could simply remain overbought and hold their uptrends. I am concerned with the sharp rise in interest rates, but stocks seem to be immune so far. At the end of the day, it is the trend that counts the most and there is no denying the current uptrends, both medium-term and short-term. As far as the daily chart is concerned, the November lows hold the key to the uptrend. A move below would forge a lower low and signal the start of a downtrend.
Key Economic Reports:
Fri - Dec 17 - 10:00 - Leading Indicators
Charts of Interest: Tuesday and Thursday in separate post.
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
