“The chart on the screen is the real market, not the one in our heads…”

The huge rally in stocks that began on October 4th, 2019, is in jeopardy. A couple of large down days have broken the steepness of the uptrend, but not the uptrend itself.

So, the $SPX chart is weakening, but hasn't completely capitulated to the bearish case yet. There is resistance at 3340 (the all-time highs) and there is support, as noted, at 3210. So if it continues to bounce around in that range, it would just be "re-generating," but a breakout in either direction should be significant.

Equity-only put-call ratios remain on sell signals.

Market breadth has been poor, and both breadfth oscillators are on sell signals.

$VIX closed above 16 on January 27th, and that gave us the sell signal. This establishes an intermediate- term uptrend in $VIX which will remain intact as long as $VIX continues to close above 15.

So, for the most part part our indicators are bearish, and a "core" bearish position is warranted. An $SPX close below 3200 would add fuel to the fire.

"In summary, it seems as if the market is slowing down, but the indicators are still overwhelmingly bullish, as the only sell signals right now are the put-call ratios and breadth. Thus, it is important to wait for $SPX and $VIX to confirm before attempting to take a strong bearish position."

SP chart is extended, overbought, as are many other indicators, but the bullish trend remains intact. Sell-off gives us a chance to see whether the underlying trend is still strong or not.

                           If VIX closes above 16, that would be a sell signal for stocks.

McClellan Oscillator poked below zero. This could mean a similar pullback to previous pullbacks within an uptrend or the beginning of something deeper.

In summary, the line of least resistance, the trend of the stock market is higher, and we do not have any confirmed sell signals at this time. For this reason, we remain bullish. But the overbought conditions are worrisome and so are the comparisons to January 2018.

When it come to an international crisis, throw your studies away, it will all mean nothing.

Hmm, puzzling non-confirmation of gold's gains Friday and today.

"I want to share this principle as I think it’s important to think about what your one big thing is when thinking about your New Years Resolutions. Everyone has at least one big thing that stands in the way of their success; find yours and deal with it. Write down what your one big thing is (such as identifying problems, designing solutions, pushing through to results) and why it exists (your emotions trip you up...you can’t visualize adequate possibilities). While you and most people probably have more than one major impediment, if you can remove or get around that one really big one, you will hugely improve your life.”

"Remember, your mental limitations are of your own making."

For years, athletes attempted to run a mile in four minutes but it seemed to be a barrier that no one could overcome. Then on May 6, 1954, a British runner named Roger Gilbert Bannister ran a mile in 3:59.4 minutes to establish a world record. Soon afterward, other runners broke Bannister’s record. Too often, we accept conventional wisdom as fact. Make sure you set your goals high enough. Don’t settle for less because of limitations you place upon yourself. Most of us never really reach the level of achievement of which we are capable because we don’t challenge ourselves to do so. Perhaps Robert Browning said it best: “A man’s reach should exceed his grasp, / Or what’s a heaven for?”

Welcome to 2020.

An extended period of geopolitical calm was shattered late Thursday when the U.S. conducted a military air strike in Baghdad, Iraq that killed a top Iranian general along with an Iraqi paramilitary leader. The U.S. said Iran was planning to kill Americans in the Middle East. The strike also comes after the major attack on a Saudi oil installation a few months ago, in which the U.S. blamed Iran. Iran promised harsh retaliation. The keen uncertainty regarding this situation, including how Iran will respond, is likely to keep the global marketplace on edge.

facts & thought

In 2019, the ratio between stocks and commodities hit a 100-year low. As we end 2019, the ratio has contracted some but can shrink much more in 2020. Since 1979, inflation has remained muted. Given statements by Steven Kaplan, the President of the Dallas Reserve, that interest rates will remain low and the future of the dollar as the world’s reserve currency is questionable, the best trades for 2020 could be in commodities.

The Fear Of Missing Out (FOMO) appears to be showing up in recent days.

 $SPX and other major indices are roaring ahead, despite a relatively narrow number of stocks participating.
The seasonal period ("Santa Claus Rally" and the end of the post-Thanksgiving seasonal) runs through Friday, January 3rd. That doesn't mean the market will abruptly fall at that time, but it does mean that it won't have the benefit of seasonality after that date.
In summary, the outlook is bullish. A market like this can produce complacency, but that is the one thing we can control. We can and must avoid becoming complacent. But, for now, enjoy the ride.

The market could hardly be stronger.

Equity-only put-call ratios are in very overbought territory, but they haven't been able to generate strong sell signals (as yet).

Market breadth has improved, and breadth oscillators are on buy signals and are in modestly overbought territory.

Volatility remains in the bullish camp. First, the $VIX "spike peak" signal from December 4th remains in place. Second, the trend of $VIX is sideways-to-down, and that is bullish as well.

In summary, we are bullish based on the indicators. However, the massive number of overbought conditions is once again worrisome, so we would not ignore sell signals, should they appear. Meanwhile, tighten trailing stops where appropriate and enjoy the ride while it lasts.

Curve steepens, puts aside recession fears.

                 The FED is still pumping,  balance sheet is again on the rapid raise.

Worth noticing that almost 80% of SP-500 stocks are above their 200 day moving average. That has happened three times in the last five years, and every time it has happened the market has pulled back.

"People are never more insecure than when they become obsessed with their fears at the expense of their dreams."

The global risk rally ran out of steam today following four bullish sessions. Volatility remains very low on Wall Street, despite the British Prime Minister Boris Johnson's announcement to limit the transition period of the Brexit process, which could increase the risk of a 'hard-Brexit' yet again.

"The cost of borrowing cash overnight on the last day of the year has surged despite the US Federal Reserve’s injection of billions of dollars into markets in an attempt to ease the strain, raising concerns that investors may be in for a volatile final few weeks of 2019."

                                      For now a pause, an inside day for small caps

In summary, the $SP-500 chart is strongly bullish. The only sell signals are from put- call ratios. So if long, stay long and use trailing stops.

Volatility has remained mostly bullish, $VIX remains below 16 on a closing basis and that is bullish.

“When you can’t control what’s happening, challenge yourself to control how you respond to what’s happening. That’s where your power is.”

Stocks ending week with power following roller-coaster ride.

"The government jobs report was nothing short of spectacular for stock investors, pointing to a textbook 'goldilocks economy' with solid growth and low inflation. Non-farm payrolls increased by 266,000 in November, well above the consensus estimate of 181,000 and last month's revised reading of 156,000. The positive revision in itself is a huge plus for bulls, and the fact that wage growth was a tad lower-than-expected confirms the muted inflationary pressures. The unemployment rate unexpectedly declined to 3.5% as well, matching the measure's recent multi-decade low, thanks to the healthy trends in the labour market."

"Politics will pose the biggest risk to financial markets in December, as the U. S.-Chinese relations could have a crucial effect on risk assets, the impeachment process will also enter its next phase, and the British elections could also cause turmoil in the usually quiet month. The strong rally of the past two months could mean that a choppier period is ahead for stocks, and even an orderly pullback may be in the cards despite the positive seasonality statistics of December. The OPEC meeting, which is scheduled for the first week of the month will likely be a tumultuous one, as Saudi Arabia is trying to pressure the cartel to increase the support of the price of oil ahead of the Initial Public Offering (IPO) of the state owned giant, Aramco."

“Most professionals agree that novices and amateurs spend far too much time studying entry techniques in relation to their true importance to successful trading. It is risk management, they agree, that really separates the winners and losers. Since the markets are not very predictable anyway, you can have a far greater impact on your bottom line by applying proper risk management techniques than by finding a new and better way to anticipate the next market top or bottom.”