Commentary: Paul Ebeling on Wall Street
$DIA, $SPY, $QQQ, $VXX
The FOMC made the bold move of hiking the Fed Funds rate 25 bpts for the 2nd time in 13 months and promised an additional 3 hikes in Y 2017,
Along with the Fed Speak politicians had to get in front of the cameras to justify to us why they deserve better healthcare than the piece of junk Barack Obamacare system many other Americans are forced to buy.
Mr. Paul Ryan met with President Elect Donald Trump a few weeks back and his Tea Party personality appeared and gushed pro Trumpian.
Despite the Trump camp’s transition promises and the stock market rally in anticipation of infrastructure spending, fiscal stimulus, and regulatory rollbacks, the politicians are loathe to relinquish their power and when they get back from the Christmas vacations they take on their old characteristics of defending the group against any chance they lose their
power. I expect that President Donald Trump will take an Iron Hand and if Mr. Ryan, and Senator McConnell cannot whip their caucuses in shape he will take them to the woodshed.
The Trump Rally is facing its 1st real test in here as the DJIA bang’s up against the Key psych resistance at 20,000
Hope for economic expansion thanks to growth policies and a rollback of economic strangling policies Vs the establishment resisting change and market physics is the dynamic in here.
The market is assessing the threats, so see it working laterally (pausing to refresh) during this week.
Bullishness at these marks have set off past corrections and sharp advances that surpass the safe margins above the 200-Day SMA that force gravity to take effect combine to suggest the market will need some kind of test, typically more than it has shown of late with its lateral moves.
The Big Q: timing?
Sentiment indicators tend to front run the market action, and it can be a week, a few weeks, a couple of months before the
gravity turns them back over.
So letting the good patterns continue to work.
Sentiment can get to extremes and stay at extremes for quite some time before a market finally decides to give in.
Some indices still have upside to work with before they reach extreme marks, After this week of sideways movement many of the early market leaders are in position to resume their Bull runs and there are new leaders coming to possibly take their shot at moving North.
If they show the moves, all speculation about market tops, extended indices, political headwinds is just that, speculation, and is out of the window.
Remember, always take what the market gives.
The Bulls Vs. The Bears
VIX: 12.2; -0.59
VXN: 13.23; -0.98
VXO: 11.58; -0.47
Put/Call Ratio (PCR) CBOE: 0.91; +0.06 12 of 35 sessions over 1.0 on the close, there was a modest rise in put option
action on the week.
The Bulls continued run to 60, now just 0.4 away. 60 to 65 have signed off on many a market correction since Y 1998. Bulls are
effectively there, suggesting that the ‘tired’ indices look that way for a reason.
The Bulls are at 59.6 Vs 58.8 last
The Bears are at 19.2 Vs 19.6 last
Support and Resistance
DJIA close: 19,843.41
The 10-Day EMA: 19,664
The 20-Day EMA: 19,407
The 50-Day EMA: 18,952
The 50-Day SMA: 18,730
18,669 the Aug 2016 high
S&P 500 close: 2258.07
The 10-Day EMA: 2246
The Y 2016 trendline: 2225
2213 the Nov 2016 high
2194 the Aug 2016 high
The 50 day EMA at 2192
2175 is the June 2016 high
The 50-Day SMA: 2174
2135 the May 2015 high
NAS Comp close: 5437.16
5404 the Nov 2016 high
The Y 2016 trendline: 5385
5340 the Oct 2016 high
The 50-Day EMA: 5310
5288 the Sept 2016 high
Have a terrific week.