While today is the official first day of winter and many of us are bracing for an artic blast named Elliott, the stock market ironically is hot this morning. Are the financial “bears” about to hibernate?
A few secondary technical indicators improved with yesterday’s action, and today’s upward opening is further confirmation. As a result, at this morning’s open (SPX @ 3,848.53) our Current Market Outlook was upgraded to “Uptrend Under Pressure” with a yellow light. Currently our “Core Four” (see top of page) has 2 yellow and 2 red lights. The VIX closed solidly below the 21-day mav yesterday and it is off sharply this am. That is bullish!
An important test of the S&P 500’s 50-day mav is underway at this moment. The stock market is attempting to “hit the brakes” on last week’s downward slide, and in so doing possibly create an early technical pattern know as a “higher low.” A look at the SPX’s chart also reveals a down/sideways/up pattern (“the brakes”) over the last 3 days just below the 50-day mav. The bulls must stand strong here now. Otherwise, the stock market will experience its own artic blast in short order.
On the 16th we wrote, “Expect either a trip under the 50-day mav’s for 2-5 days and then a “stand” by the institutions at a “higher low” price level that leads to a surprise rally into the new year or look out below! If the market does not make a bold stand asap then sharply lower price exploration may be inevitable.” This stand is under way and coming at a time that most market participants are either distracted with Christmas or discouraged with stocks. A recipe for a rally as good as your grandmothers!
One more positive technical aspect for the bulls. Take a look again at the SPX chart and focus on the exact October low price and then note the high price of the December 13th negative reversal day. Now calculate the mid-point of those 2 price levels and compare to yesterday’s low price. BINGO! A near perfect 50% retracement. (Yesterday’s low can be used as a major tell.)
Under last weeks “Game plan” we also shared, “It may turn out to be a “violent-3″ shakeout and buying opportunity… or it may not. If it does, our signals would be upgraded as the market improved.” And so that potential positive stand by the institutions has gently begun and our signal has caught it already and caused an upgrade to yellow this morning. A major key for future gains will be if the S&P 500 can move back above its 50-day mav, and hold it.
Game plan: Continue to employ defensive risk management tactics. Pay close attention as the market attempts to rebound from the recent violent drop to and through the major indexes 50-day mav’s. And may you and yours have a very Merry Christmas!
Note: You can learn more about The Triumphant Core Four risk management system by clicking here.
Have a Triumphant day! ®
The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice. ©2022 Triumphant Portfolio Management, LLC.
Where Are Woodward and Bernstein When We Need Them? This article was written by Newt