December 21, 2012

Stock Market Crash Course: Christmas Rally

Written By Chloe Lutts Jensen

Chloe Lutts Jensen

With Christmas just a few days away, it looks like all systems go for the market into the new year. The next couple holiday weeks will probably be quiet, and we may see a pause in the rally as the market digests its overbought position, but the trends are all bullish, signaling more gains ahead. Click below to watch the video! 

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Chloe Lutts, Editor of Dick Davis Investment Digest and Dick Davis Dividend Digest

Chloe Lutts is the editor of Dick Davis Investment Digest and Dick Davis Dividend Digest, and the third generation of the Lutts family to join the family business. For each Digest, Chloe reads hundreds of investment newsletters to select the strongest ideas for her readers. Prior to joining the Dick Davis Digests, Chloe was a financial reporter for Debtwire, a division of the Financial Times, covering fixed income, and before that, she reported on global debt markets for Institutional Investor. She also has previous experience at Cabot, writing about growing momentum stocks for Cabot Top Ten Trader and high-potential small companies for Cabot Small-Cap Confidential. She holds a B.A. in International Relations from Brown University, and also studied in Beijing and Paris.

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[Transcript]

“The Path Is Never Straight But The Overall Direction Is Still Up”

John Gray, Investors Intelligence, Thursday morning:

“The index rally paused Wednesday but the modest weakness shown by the averages at the close did not extend to the broader market. Advance-decline breadth was flat and volume contracted. Indicator charts were little changed with no new downturns. That left the Monday/Tuesday bullish signals intact. More stocks shifted to buy signals, reversing the important slow-moving NYSE bullish % chart to the upside. That chart last reversed on July 3 and markets were higher two-months later. The path upward then wasn’t straight but the upturn is again suggestive that the highs for the current move have not occurred. …

“Some short-term indicators also show trading close to the September peak levels and conditions are overbought. That could mean an upcoming pause and even a small retreat. That occurred early last summer after the NYSE bullish % chart reversed up. … The path is never straight but the overall direction is still up.”

Richard Rhodes, The Rhodes Report, Thursday morning:

“There is nothing that has changed with our current analysis of the S&P 500 – our proxy for the general market. Yesterday’s decline did nothing more than correct a smallish overbought condition; but we suspect prices will find their footing and power higher – albeit perhaps in a manner that isn’t as strong as other parts of the rally. In any case, the breakout above the 1424 level is clear and unequivocal, and it shall provide support to declines. …

“Therefore, higher prices are likely in the weeks ahead; and our duty is to fight with the side that is winning. Our upside target is 1525-to-1575, this zone is longer-term resistance seen during the 2000 and 2007 highs; which is natural selling resistance.”

Michael Cintolo, Editor of Cabot Market Letter, Wednesday afternoon:

“While the market was a bit wishy-washy for a few days after our Cabot Tides buy signal two weeks ago, the buyers are now starting to flex their muscle, driving the indexes and a broader array of stocks higher. And our Two-Second Indicator remains in good shape, with no plus-40 readings since mid-November. It’s not a grand bull market (yet), but the environment is improving.

“Sure, there are still many unknowns out there, especially the well-publicized Fiscal Cliff, which seems to be mentioned in every market-related headline. And you can bet that volume is set to taper off in the next week or two as most traders head home for the holidays, which might make decisive moves up or down tough to come by. But the evidence looks good.”

Stephen Todd, editor of the Todd Market Forecast, Thursday morning:

“Over the last couple of days the market was higher because of perceived progress on the fiscal cliff. Today it was down because of perceived lack of progress.

“It really gets tedious. I wish that they would shut up until they have a deal. This blow-by-blow is really irritating. …

“We probably would get a clue how our market would be doing without the political turmoil by looking at the German ETF, symbol EWG. France looks somewhat similar. There is definitely a push higher among our closest relatives in the world markets.

One Response to “Stock Market Crash Course: Christmas Rally”

  1. [...] With Christmas just a day away, it looks like all systems go for the market into the new year. The next couple holiday weeks will probably be quiet, and we may see a pause in the rally as the market digests its overbought position, but the trends are all bullish, signaling more gains ahead. Click here to watch the video! [...]

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