Market finished the year on a positive note.
Volume was the highest of these past few days, but still below average. Breadth was positive. In fact, McClellan Oscillator continued its turnaround from the proximity of neutral level and went back into overbought territory.
Volatility continued to shrink, and, for a change, more issues made new highs on NYSE than new lows, albeit the numbers are very small. Advance/Decline line is now nicely pointing up along a good trend from November lows.
Number of issues above their 50 DMA continued to rise. And number of issues above 200 DMA has started to perk up
Index picked right where it had left it yesterday and powered on – only to get to the neighbourhood of 912 pivot near the end of the market day.
Index is very overbought short term, and it is showing some negative divergences on 15-minute time frame. If the strength of today carries into Jan 2009, I would expect a shallow (38 – 50%) pullback soon, and another assault on 912.
Regardless of what I expect, charts (i.e. price action) speak the final word.
If the index does not pullback and powers through 912 – 920 area, it will leave me with two questions to answer:
- Should I buy the breakout or wait for the pullback?
- Should I sell part or all of the long positions established from lower levels
If the index pulls back deeply but stays above 850, and if market internals are not overwhelmingly negative, to me, it will be the same range bound action we have so far had
Both counts on the above chart are bullish in nature. I have decided not to clutter the charts with bearish scenarios as long as index holds above 850. Just be mindful that the 850 area is of technical importance. Also, be mindful of the fact that, as I have mentioned on a couple of occasions, I am leaning towards the bullish case as long as the technicals do not deteriorate and index stays above 850.
This is the last post of 2008. It's been a productive year, especially since I started blogging. I would like to thank each and every one of you for gracing this blog with your readership. And I hope I have not disappointed too much.
It's about time we forgot about the market and started thinking of the bubbly juice, or whatever it is that makes you giddy at new year.
Happy New Year!