Sunday, December 17, 2017

No Christmas Rally this Year

The last post analysis identified a symmetrical triangle pattern in the SPY (ETF for S&P 500).  This triangle was formed after a huge rally in the month of October.  All signs were pointed toward an upward breakout leading us into the end of the year with a nice Santa rally.  Well, symmetrical triangles can break in either direction, and with all the chaos in Europe and the recent failure of the debt super-committee,  we have broken down through the triangle, putting the chances of a significant end of year rally in serious jeopardy.

Today’s analysis is simple and involves two exponential moving averages, the 13 and 23 day lines on the daily chart.  The signal we’re looking for are crossovers of the 13 day average either up through the 23 (bullish) or down through it (bearish).   The chart shows the wonderful signals this indicator has produced.

We sit on the cusp of a bearish cross right now.  What will your next move be?  The odds say go to a safe haven vehicle like cash or bonds for now to preserve your capital.

Good luck!

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