Your Dirty Dozen - Monday, December 16

You’d be surprised when you’re put right on the ball and you’ve got to do something and everybody’s looking at you going, OK, what’s going to happen? You put yourself there on the firing line — give me a blindfold and a last cigarette and let’s go. And you’d be surprised by how much comes out of you before you die.  ~ Keith Richards

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at the technical picture for the SPX, go through some stats that show this bull is gonna keep running, talk about the latest data that suggests the global economy has troughed, and finish with some single stock setups we’re looking at. Let’s dive in…

1. The following chart and text are from Al Brooks. “The monthly S&P500 Emini futures chart finally broke above the top of its 13-year bull channel on Thursday. The breakout is small so far, but there are many days left to the month.

I had been saying for a couple of months that the breakout was likely. But I also have been saying that there is only a 25% chance of a successful breakout above the top of a bull channel. By that, I mean an acceleration up into a stronger bull trend. The most dramatic example was the monthly chart in 1995. That breakout above a bull channel led to a huge bull trend.

In 75% of cases, there is a reversal down back into the channel within about 5 bars. An example of a reversal from a failed bull breakout above a bull channel happened in January 2018 on the weekly chart. The Emini eventually sold off 20% and went sideways for almost 2 years.

Five bars on the monthly chart is almost half a year. Therefore, the Emini could continue up for several more months before reversing down.”


2. After nearly 2-years of trading sideways, the NYSE took out Jan 18’s highs. @RyanDetrick points out that the market’s future returns after hitting new all-time highs following a year or more of sideways action tend to be pretty good, writing “Since 1980, higher 6 months later 7 of 8 and higher 12 months later every time.” The path of least resistance is still clearly up for equities…

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Disclaimer: All statements are solely opinions and are for educational purposes only.

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