Sunday, December 17, 2017

Christmas Rally Coming?

With the exception of more shockingly bad news on the European debt front, the chart pattern in setting up perfectly for an end of the year Christmas rally.

After a huge pullback late spring and through most of the summer, the S&P 500 staged an incredible rally in the month of October.

Then, the past couple of weeks has brought an increase in volatility as more bad news emerged out of Europe, specifically Greece and Italy.  The DOW lost 400 points earlier this week. Bears were salivating…

However, Government shakeups happened in those two countries and Italy has accepted an austerity package.

Notice below how this is shaking out on the chart.

The October rally represents the dominant trend.  The recent volatility has formed a symmetrical triangle consolidation pattern.  Although symmetrical triangles can break in either direction, they are usually continuation patterns of the dominant trend.  The dominant trend is up.  Also notice we’re currently above the 50 and 200 day moving averages, and also the 13 day EMA. These are all very bullish signals.

I look for run to S&P 1370 by year’s end unless something horrible happens in Europe between now and then.

Also, remember there are lots and lots of fund managers that have bonus money riding on end of the year rallies.

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