S&P 500 Index Trading Outlook (3-5 Days): Bearish
I am expecting initial pullback lows early next week.
For the second straight day, the S&P 500 recovered 3100, but Semiconductors and Transports remain weak.
The “trading” trend for the S&P 500 is bearish until/unless 3118 is recouped, which would send prices higher into 3150-5 by end of month.
A move under 3090 points to 3060-3.
Broad Market Commentary
The equity markets tried to sell off, but yet held up admirably and made a last ditch effort to reclaim 3100 again for the second straight day. Of course, breadth was negative again, but volume actually was more positive and more volume into UP than Down stocks.
Unfortunately for bulls, the market does seem to be tiring, and we’re now seeing leading sectors like Transports and Semis start to turn lower (Transports look to have made a false breakout and are down nearly 4% since Nov 6, right when breadth peaked out) We’ve also seen daily momentum gauges like MACD roll over and cross the signal line, turning the daily trend negative.
Meanwhile, Demark’s TD Sequential indicator confirmed a countdown 13 Sell yesterday with the S&P’s close under 3120.46. None of this means, of course that markets cannot rally into the Thanksgiving holiday and into end of month, as the selling thus far has proven fairly muted. However, markets are losing strength in the short run, so rallies are needed right away to avoid a pullback to 3060.
I am of the opinion that a 3-5 day decline is ongoing currently which could bottom early next week ahead of Thanksgiving, try to rally towards highs, but then potentially fail again.
However, given the bullish month of December approaching, i feel that the larger pullback likely will be postponed until January. For now, it still appears like markets can weaken, and if not right away, then over the next few weeks before a year-end push higher.
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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.
