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Last week’s massive rally in equities brought the S&P 500 up to the downtrend since July where it may find some resistance before ultimately having a good chance to head higher into the 1300 area.
Last Monday we said: “The S&P 500 did find support (it’s last as far as we are concerned) at the 61.8% retracement line from the October lows-to-highs swing. A bounce here looks likely” but if and when that support breaks the October lows will likely be broken sooner rather than later.
After a little breather of 1% to 3% in the S&P 500 this coming week we suspect a rally up to near the 1300 mark or a little above stands a decent chance.
We will look to gain some long exposure via Bucket 2 once the immediate-term overbought levels subside. Vehicles of choice include SPY and a few alpha and beta names…we will post them on the blog again shortly this morning.
Immediate term a pullback of 1-3% is likely…see the shooting star candle from Friday on the S&P 500 chart below.
Stocks are more or less still in a very wide and choppy sideways pattern…as indicated by the chart of the Nasdaq 100 below.
Gold is making higher lows again and on the charts displays a nice wedge pattern…a breakout in either direction can be played…if and when.