We are seeing normal corrective declines in the broader indexes of late. December has been volatile from day one. Tax selling is obvious to me, and we are seeing extreme oversold set ups in Energy stocks. Insiders have been loading up the last few weeks yet those same stocks are still declining, and we think Hedge funds are taking on heavy losses, and selling is begetting selling.
Also, the percentage of stocks above their 50 day moving averages hit the mid 60’s recently which is pretty high. Currently at 53% still and likely to fall further into year end? We also look at the NASI Summation index, and that is topping and rolling over… another topping signal. So the likelihood is we are in early stages of a wave 2 correction from 2070 SP 500 highs after a 250 point rally. Initial support is at the 1994-2000 area for starters, so let’s see if that area holds.
The DOW we want to see 17000 support, and its not just a number I made up its a key support line. NASDAQ look for initial key support at 4617 and 4457 below that.
Biotech stocks are very inflated here, though I like them and have profited. They seem like the end of season rotation to save some Portfolios and window dressing.
Looking for Energy stocks to be the January rebound winner candidates.
Need to see GOLD over 1241 on Closing basis before I start getting bullish.
Dave Banister- Chief Strategist
www.MarketTrendForecast.com Join us for a 33% discount!