The market is back to the recent play book. While social media is littered with top callers, the market continued to be resilient. Mean reversion is dead in long stretches where very shallow intraday pull backs in the morning are bought up by mid day. Call buyers continue to be active and all time high chasers will likely continue into the holidays.
While the bulls slowed down, they still showed impressive strength after a 220pt+ rally. With Thanksgiving around the corner, more upside is likely.
In line with the V shape recovery from past 2 years, the market continue to defy mean reversion and grind higher. Other than a couple of 10 point drops intraday, every dip is bought furiously. With strong seasonality into year end and international easing, bulls continue to be in charge.
After some back and fill on the FOMC meeting, the SPY took off to test 2014 high on BOJ stimulus. SPX support remains at 1973 with resistance at 2019. We are a bit stretched here and the elections are Tuesday, so I wouldn’t be surprised at all if the market exhibits some profit taking. Hopefully a small pullback will give us some good entries into another strong seasonality week.
The market seemed to have priced in the Ebola scare while earnings mostly held up to lowered expectations. The market closed strongly over SPX 1920, retested the next day and continued into the next resistance level. Will this be the right shoulder or launch point into year end high?
Another down week and we got pretty close to the elusive 10% correction. QE rumor saved the bulls from further damage, but the IWM looks to run out of gas toward the close Friday. Seasonality will again be poor next week and at best the market may put in a choppy range and at worst a possible lower low. Everyone will be watching the recently broken 200 moving average around SPX 1900 and above that 1920. Those are formidable resistance and will likely take more than one try to close above.