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The Triumphant Core Four

NYSE Internals
Moving Averages
Professional Selling
Investor Sentiment

Special Bulletin: December 9, 2020


Does the Year-End Rally Need a Santa Pause?

The market experienced a dose of heavy selling (a.k.a. a Distribution Day) today. That wasn’t all that surprising given the multi-day run to all-time highs in the key indexes over the past month. But today marked the fourth Distribution Day on the S&P500 in the past 25 trading sessions. Couple that with the excessively bullish readings of the Investors Intelligence survey of stock market newsletter writers and the very low NYSE put/call ratio, and the result is a stock market that is vulnerable in the near term.

As a result, our Current Market Outlook has been downgraded to “Uptrend Under Pressure” with a “yellow” light. Today’s fourth Distribution Day on the S&P500 has pushed one of our Core Four indicators to yellow, while another remained red and the last two stayed green. This combination signals a cautious outlook, but it is important to remember that the leading stock market indexes are still above their key moving averages (10, 21, & 50 days), and are only a percent or two from all-time highs. Additionally, other internal indicators are not signaling a serious bear market is at hand.

It is entirely possible that the market could catch itself here and bolt higher, especially if Congress passes a new stimulus deal by Friday. If that were to happen, our Core Four indicators would process that type of positive action immediately and produce a signal change back to green quickly. 

On the other hand, maybe “Mr. Market” knows something about the pending stimulus and budget deals that the rest of us don’t. Perhaps that is why the market showed weakness today, which in turn caused our Core Four indicators to signal a change to yellow. Time will tell.

What can an investor do now? Take stock of your recent purchases and button down at least partial profits. Watch the 3 key moving averages on the main stock indexes closely for downward price violations on increased volume. Keep checking (here) for “election integrity” updates on the rigged 2020 Presidential results.

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. ©2020 Triumphant Portfolio Management, LLC.

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