Commentary: Paul Ebeling on Wall Street

$DJIA,  $SPY, $QQQ, $RUTX, $XRT, $AMZN, $VXX

The S&P 500 rallied 5.0% Wednesday from extremely oversold conditions

Rebounding Crude Oil prices, strong holiday sales, and some short covering drover the S&P 500 to its best 1-day gainer since March 2009.

The Dow Jones Industrial Average gained 5.0%, the NAS Comp gained 5.8%, and the Russell 2000 gained 5.0%.

The S&P 500 overcame an early dip into negative territory with investors adopting a risk-on sentiment. And, instead of selling into the close, the benchmark index departed from the recent trend and accelerated its advance in the final hour of trading.

Risk-on sentiment was full on with all 11 S&P 500 sectors finishing in the Green. The cyclical consumer discretionary (+6.3%), energy (+6.2%), and information technology (+6.1%) groups outperformed the broader market.

Amazon (NASDAQ:AMZN) 1470.90, +126.94, +9.5% and retail stocks, in particular, led the consumer discretionary space due North. 

The SPDR S&P Retail ETF (XRT) 40.65, +2.20) rose 5.7%.

Amazon announced a record-breaking holiday season, and MasterCard’s SpendingPulse report noted that holiday sales from 1 November through 24 December showed the strongest year-over-year growth rate since Y 2011, resulting in a new record for USDs spent. 

Demand for US Treasuries faded as investors flocked to riskier assets.

The US Dollar (.DXY) Index rose 0.5% to 97.07 

Wednesday’s power rally in equities caused the CBOE Volatility Index (VIX 30.41, -5.66) to surrender nearly 6 points. The decline pressured the volatility gauge to its closing level from Friday.

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Monday is a 1/2 session in the US closing at 1:00p EST. Tuesday the market is closed. The rest of the week is usual hours, but many Wall Street traders are gone for the week, leaving fewer buyer and sellers.

 I expect the buyers will have orders in already, to play for a relief bounce after Fridays huge volume Quad Witching day sell-off.

There are good stock with good patterns ready to bounce off of support. Then we will see. 

The NAS Comp is in Bear market territory and so we are thinking in terms of Southside plays, but will be watching issues with Northside patterns setting up.

I do expect that most players have a Bear market outlook, having banked the big gainers gain will be looking to bank more on any serious selling this week, the market has a way of fooling people, so as much as you might want to be on Holiday, pay attention. It is your money and so, your responsibility.

The Bulls Vs The Bears

Sentiment Indicators

VXN: 33.87; +2.87 
VXO: 32.11; +2.06 

Put/Call Ratio (PCR) CBOE: 1.43; -0.39, signaling the market is in position for a bounce.

The Bulls Vs The Bears: 

Note: This coming week’s numbers should show a Bull dive and Bear jump, converging the 2 to marks not seen since Y 2016. 

The Bulls are at: 39.3 Vs 45.5 last

The Bears are at: 21.4 Vs 20.4  last

Support and Resistance

HeffX-LTN’s technical outlook for US major stock market indexes for the week ended 21 December 2018

Date Symbol Price Technical Analysis Support Resistance
21 Dec QQQ 147.57 Bearish (-0.32) NIL 158.42
21 Dec DIA 224.09 Bearish (-0.29) NIL 242.81
21 Dec SPY 240.70 Bearish (-0.38) NIL 263.64

Have a Happy Christmas Week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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