The broader stock market faces the task of confirming the recent rally with a strong continuation move (and not reversing!). Will it happen? That is the big question.
This is but one potential move for stock indices like the S&P 500 Index and Nasdaq Composite (and others). Below I share a few ideas for how year-end will unfold with a few timing remarks. Visit my website for more detailed information, as well as my premium service offerings. You can also follow me on twitter @MarkNewtonCMT.
Overall, 3 paths look possible for the stock market into year-end:
1. An immediate follow-through higher, with the ValueLine, NY Composite, S&P 500 and NASDAQ Composite all making highs above February peaks while the VIX Volatility Index breaks its August lows. This would then set the tone for another 2-3 weeks of rally which would carry indices higher throughout December.
2. A near-term top by the end of this week coinciding with the US Dollar reversing higher. This would set the tone for a mild pullback but that likely holds 3585 (on the S&P 500) before moving up to 3710-3720 into December 14-15th (or Dec 21-22… or end of year).
3. An immediate pullback (Least likely now of all three options) which gives back all of Tuesday’s gains, while keeping the recent 11/9-11/30 price range intact. This would require a violation of 3585 on the S&P 500 followed by a move under 3540.
If you have an interest in seeing timely intra-day market updates on my private twitter feed, please follow @NewtonAdvisors. Also, feel free to send me an email at firstname.lastname@example.org regarding how my Technical work can add alpha to your portfolio management process.
Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.