As stocks powered to the upside again last week, some Wall Street experts raised their forecasts for both the S&P 500 and also Apple’s stock price. Some are comparing the current action to 2013. 2013 was a standout year for the bull market, but it seems likely that the major averages will do even better in 2019 by the time the year is finished.

In 2012, the markets were facing the “fiscal cliff”, which spooked the markets heading into the end of the year. However, regardless of the fiscal cliff, I felt that more important was the bullish action of the advance/decline lines which led me to feel that “stocks could be the best Christmas gift”.

There were a number of corrections in 2013, and much like 2019, there was over a 5% correction in May that ended in early June. Also like this year it wasn’t really clear until November that 2013 was going to be a stellar year in terms of performance.

SPY Weekly 2013 TOM ASPRAY-VIPERREPORT.COM

The weekly chart of the Spyder Trust (SPY) shows that it closed strong in December 2013 as it was up 2.58% for the month. As of Friday’s close at $320.96, the SPY is up 2.11% so far in December 2019 and there are almost two weeks left.

The parallels between 2013 and 2019 extend to the action of the weekly S&P 500 advance/decline line. It moved back above its Weighted Moving Average (WMA) on January 11, 2013 (line 1), and during 2013, it only dropped below its WMA for one week, August 30 (line 2). The WMA was tested in December 2013 but did not drop below it until January 24, 2014 (line 3). After two weeks in 2014, the A/D line moved back above its WMA.

SPY TOM ASPRAY-VIPERREPORT.COM

The daily chart shows that the S&P 500 A/D line also finished 2013 on a strong note. The WMA of the A/D line was violated on January 13 before the SPY again pushed back towards the highs. The SPY gapped lower on January 23 (line 1) and closed below its WMA. The SPY declined for nine days, and from the high to the low, the SPY corrected by 6%. The A/D line fell to the support from November and December (line a) but then turned higher in early February.

Turning to the year 2019, the weekly S&P 500 A/D line (not shown) also turned positive the week ending January 11, 2019, and only dropped below its WMA for one week at the end of May.

SPY Current TOM ASPRAY-VIPERREPORT.COM

The daily chart shows that the SPY's July-October trading range (lines a and b) was completed on October 28 (point 1). The width of the trading range has upside targets in the $320-area. The SPY closed Friday at $320.73. This does not mean that the SPY can’t go even higher, but I favor waiting for a lower risk buying opportunity in the near future.

The daily S&P 500 A/D line broke out to the upside on October 10 (point 2). The A/D line dropped below its Exponential Moving Average (EMA) on December 2-3 before it resumed its strong uptrend. The A/D line has made a series of new highs since Dec.12 and is well above its rising EMA. There is longer-term A/D line support at the uptrend (line c).

SectorsNew

TURNING TO THE YEAR 2019, THE WEEKLY S&P 500 A/D LINE (NOT SHOWN) ALSO TURNED POSITIVE THE WEEK ENDING JANUARY 11, 2019, AND ONLY DROPPED BELOW ITS WMA FOR ONE WEEK AT THE END OF MAY.

It should be no surprise that it has been a great year for most sectors, as ten of eleven are up over 20% Year-To-Date (YTD). Clearly, the Technology Sector (XLK) is the clear leader, up 48.2% and over 15 percentage points better than the second-place ETF, the Communications Services Sector (XLC). The health care sector, which I updated readers on last week, is starting to catch up with some of the other sectors, up 20.2% YTD.

XLY TOMASPRAY-VIPERREPORT.COM

Many of these ETF's broke out to the upside several months ago, but the Consumer Discretionary Select (XLY) just completed its trading range last week by overcoming the resistance (line a), to close at $124.55, up 1.38% for the week. It is still the fifth-best performer for the year, up 27.1%. The daily trading range has upside targets in the $130-$132 area. It was favored for traders at the start of the week, as the On Balance Volume (OBV) had broken out through the long term resistance (line b).

Even though there are no signs yet that the market is ready to correct, a pullback is likely in the first part of 2020, as in 2014. It is tough to determine what the catalyst may be for a market correction. However, I am confident that the A/D line analysis will alert us to a correction, which will also be a buying opportunity.

I will have a limited publishing schedule for the next two weeks, but I wish all of you a happy and joyous holiday season.