Technical Outlook:
- S&P 500 had a monster rally on Friday that wiped out all of Thursday's sell-off and nearly half of Wednesday's.
- The bounce was critical for the bulls as the market was on the verge of slipping into another meaningful pullback.
- Instead, S&P 500 recaptured the 5, 10, 20, and 200-day moving averages in one fell swoop.
- Volume on SPDR S&P 500 (N:SPY) was enormous, eclipsing even the levels we saw on Thursday and represented the largest reading since the rally on 10/2 when the market had just bottomed for a second time and bounced off of those lows.
- VIX sell-off was significant as well with an 18% drop as it failed to push through the resistance I noted in Friday's trading plan.
- T2108 (% of stocks trading above their 40-day moving average) had a strong snap-back as well with a 18% rally getting back up to 43%. Though on its chart there is no notable technical improvements as a result of this move.
- Inverse head and shoulders pattern is back in play here, as confirmation is at 2115. Secure that price level, and this market takes on a whole new meaning for the bulls.
- S&P 500 30 minute chart has price action back in the range where there was heavy consolidation prior to the 2-day sell-off last week.
- If the 11/16 lows are lost at 2019, you have a confirmed double top pattern that is now in play on S&P 500 and the market turns decidedly bearish as a result.
- SPY is essentially sitting in the middle of the range that has plagued the market all year long, outside of the August/September sell-off.
- For twelve years straight, the market over the course of the last 30 trading days of the calendar year, has yielded a net positive gain, and thus reinforcing the concept of the "Santa Rally".
My Trades:
- Added two new long positions on Friday.
- Sold Tesla Motors Inc (O:TSLA) on Friday at $230.37 for a 1.6% loss.
- Will consider adding one to two new long positions to the portfolio today if the market can continue Friday's rally today.
- 70% Long / 30% Cash
- Remain long: Amazon.com Inc (O:AMZN) at $673.85, Autodesk Inc (O:ADSK) at $63.63, Salesforce.com Inc (N:CRM) at $79.86, ProShares UltraPro S&P500 (N:UPRO) at $67.47 and three other positions.
