Commentary: Paul Ebeling on Wall Street
$DIA, $SPY, $QQQ, $VXX
There is a lot of data is due this week including the FOMC rate policy decision Wednesday afternoon. Most people believe the Fed will raise rates as it did a year ago.
Wednesday sees Retail sales, PPI, Industrial Production and Capacity. CPI is revealed Thursday, Philly Fed, Empire manufacturing.
Improving data does not hurt, but what the new Trump Administration can do with new policies is more important than
the last gasps from the economic malaise resulting from the past 8 years of the Obama Admin’s policies, regulations, and taxes.
The market action is the Key for us.
- Russell 2000 +22.2% YTD
- DJIA +13.4% YTD
- S&P 500 +10.6% YTD
- NAS Comp +8.7% YTD
Big moves last week rotating from group to group, index to index. Still good technical action for the most part with NAS Comp showing good volume on the Northside, as the RUTX and S&P 400 broke to the Northside as a sign of strong growth ahead.
The RUTX, S&P400, and DJIA are at or near levels above their 200-Day SMA where, historically, they start to struggle.
Bullish sentiment is at 59, just below levels where it has topped and the market has corrected.
The VIX had 2 aberrant sessions, rising along with the stock market, an event that historically leads to some selling back off a 52 wk highs.
New highs are getting high.
Definitely structural things to watch but not the last word on The Trump Rally. There is good leadership, others are step up, positive rotation happening.
And the DJIA is tapping the psych mark at 20,000.
That is a magnet to draw the DJIA and market higher. Once there, then there could very well be a healthy pullback to test the move. Hitting milestones such as 20,000 the indices then run to them, then there is some profit taking.
I am not keen on chasing new positions, but will play those that we can make money on during another run while DJIA seeks to mark 20,000.
And, of course let existing plays run and look to bank more gainer as they follow DJIA to 20,000. Once there, expect a test or
some larger fade.
Note: that is the expectation based upon typical pattern analysis.
Donald Trump and his atypical approach have led to atypical results in other areas, so we will continue watching the action to see if they provide opportunity for gainers.
Remember, always take what the market gives.
The Bills Vs. The Bears
VIX: 11.75; -0.89.
Note: VIX moved lower as stocks rallied Friday, the typical relation after that aberration Wednesday and Thursday when VIX rose with the market.
Overall VIX is not trending higher as the market trends higher, so no indication of a major top in here, but possibly a near term one approaching.
VXN: 14.27; -0.55
VXO: 10.85; -2.01
Put/Call Ratio (PCR) CBOE: 0.82; +0.07
12 of 30 sessions over 1.0 on the close Friday. Thursday showed the lowest reading in some time. Southside capitulation, something to watch along with the Bulls as it shows a significant drop in put activity.
The Bulls move up to near 60 starts waving the Red Flag for the Top of market moves. That has happened for the past 30 years. The Bears fell hard but still have room to fall. The Bulls are a more immediate concern in here.
The Bulls are at 58.8 Vs 56.3 last
The Bears are at 19.6 Vs 22.3 last
Support and Resistance
DJIA Close: 19,756.85
The 10-Day EMA: 19,361
The 50-Day EMA: 18,756
18,669 the Aug 2016 high
18,595 the Jul 2016 high
The 50-Day SMA 18,572
S&P 500 Close: 2259.53
2216 the 2016 trendline
2213 the Nov 2016 high
2194 the Aug 2016 high
The 50-Day EMA: 2177
2175 the Jun 2016 high
The 50-Day SMA: 2163
NAS Comp Close: 5444.50
5404 the Nov 2016 high
5340 the Sept 2016 high.
5288 the Sept 2016 high
The 50-Day EMA: 5281
Have a terrific week.
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