Market Stats

Tonight's newsletter is longer than usual so make yourself comfortable as I've got a lot of charts I wanted to cover as we head into the end of the year.

There were no major economic reports today and there were no traders. OK, I exaggerate--you and I were trading. OK, I lied--you were trading. And you're probably sorry you tried (unless you caught the quick selloff at the end of the day). It's been a very quiet week and other than staring at the screen and swearing you see great setups (if you're scalping pennies), it's been a bit like watching your grass grow, which for those of you on the east coast is a problem since the grass is covered with about twenty gazillion feet of snow.

I wonder every year why I bother sitting in front of my computer screens during this week. But of course I know the answer--I'm addicted to the market because I really love what I do. Even the small movements, if I dial in close enough, provide opportunities to analyze the market for setups, confirmations and surprises. Today was no different as I was looking for some confirmations of the setups I was watching for and I think I saw them (more later). But in reality, with the very slow volume and lack of participation by the big dogs (who are happy just to see the market holding up), market analysis could be nothing more than fantasy. But I enjoy fantasy land and I'll share it with you.

If you've been struggling to find some good trading this month, especially in the indexes, you're not alone. It's been good for sellers of premium but certainly not for directional plays. I keep track of several market statistics in a spreadsheet and one is how much the DOW moved that day, rounded off to a whole number. One look at the numbers below will quickly tell you why it's been a pretty boring month once the first two days finished. It was like someone turned the switch off:

Because of the lower-than-normal volume this week (month), it becomes harder to decipher price moves for their relevance. I think it's safe to say the market was more "held up" than rallied this month, especially when looking at the blue chips, with each day tacking on a few more points (and declaring on an almost daily basis how the DOW has achieved new highs not seen since 2008; I remember the same thing happening into the October 2007 top, mentioning nearly every day how the DOW made a new all-time high). The DOW has pushed up into a potentially tough resistance zone, in the 11600-11700 area, at a time when it's looking overbought on just about any measure you use and with an extremely high bullish sentiment (more on sentiment at the end of tonight's report). Are we due a pullback? Yes. The bigger question is when and from what level will it start. So let's dive right into the charts and what I see coming (it's either a light at the end of the tunnel or a fast moving train).

I'll focus on the DOW in tonight's newsletter since everyone is watching it. I usually start with the SPX weekly chart and last week focused on the RUT. So it's the DOW's turn tonight. The weekly DOW chart shows price reached the 2/3 retracement of the 2007-2009 decline, which is at 11622.10 (today's high was 11625). We often hear that a normal retracement is 1/3 to 2/3 so the DOW is clearly at the top end of that retracement zone but can still be considered a "normal" retracement of the 2007-2009 bear market leg down. Slightly higher, if the bulls can keep going into January, is price-level resistance near 11700, which is based on previous support and resistance in 2006 and 2008. You can see that the DOW has reached the level in 2008 where it bounced up into the August highs before ripping to the downside into the March 2009 low.

Dow Industrials, INDU, Weekly chart

I think regardless of whether 2011 will be an up year or down year, the first quarter is likely to be down, and there's one setup calling for it to be hard down in January. What's not clear yet, and won't be for at least another month or two, is whether we'll get another rally leg after an expected pullback. The green wave count on the chart above calls for a pullback to correct the July-December rally and then a continuation higher in a strong rally (probably up to 15K into the end of 2011). While I have my doubts about that bullish scenario I can't rule it out yet (it needs to drop below the July low near 10900 before it can be ruled out). So we'll take it one leg at a time and see how price develops.

We could see a quick move down to the 11K area in January to complete a larger a-b-c correction from the November high that finds support at the uptrend line from March 2009 and/or the November low, both near 10900. That could set up another rally leg that reaches 12K before finishing a 5-wave move up from July. If we get a sharp move down in January it will be a good time to test the long side even if it will be just a bounce correction to the decline (since it will likely be a high bounce even if not to a new high).

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 11,700
- bearish below 11,420 and longer-term bearish below 10,900 (price low as well as 200-week MA)

As I have been discussing on the DOW's chart, the price projection near 11613 (where the 5th wave of the rally from July achieved 62% of the 1st wave) was tagged today. It's hard to see but today's candle is a shooting star at that line of resistance, which was also a throw-over above its rising wedge pattern, shown more clearly in the 120-min chart below.

Getting in closer to the move up from the end of November, and especially the move up from mid December, it has formed a rising wedge, which is very common after the end of a big move. Today's high was a throw-over above the top of the wedge and then a drop back inside. This is a common ending move for wedges so we've got a small sell signal at the moment. However, the sell signal will not be confirmed until it drops below the wedge and Monday's low near 11518. In the meantime we could see the market held up, and pushed higher, into the end of the week (easy to do with such low volume). A rally above 11650 would be bullish since it would be a solid confirmation of a break above the rising wedge pattern (thereby negating it).

Dow Industrials, INDU, 120-min chart

SPX is forming the same small rising wedge pattern as the DOW but it hasn't reached the top of its wedge yet, near 1268.50 Thursday morning. A little higher, at 1276.62, is the 127% extension of the April-July decline. The 113% (1246.96) and 127% extensions are common reversal levels so they bear watching. SPX stalled at the lower one in mid December but broke above it on December 21st. So the top of the rising wedge to the 127% Fib gives us an upside target zone of about 1269-1277. If SPX works its way slowly higher over the next two days, and stays inside the rising wedge, it could tag the higher level by Friday with a little throw-over finish, which is what I've depicted on the chart. The risk is that the rally has completed the necessary wave count and could therefore start back down at any time now (dashed line). With only two days to finish the year I've certainly been wondering if "they" will do everything possible to ensure SPX closes at or above 1250. If both the DOW and SPX break above their rising wedges, there is a higher upside target for SPX near 1292, which is where the 5th wave of the rally from July would equal the 1st wave. The bulls keep control of the ball as long as SPX remains above Monday's low near 1251, which would signal a deeper pullback is likely in progress.

S&P 500, SPX, Daily chart

Key Levels for SPX:
- bullish above 1277
- bearish below 1232 and longer-term bearish below 1173

There's very little to add about NDX to comments made a week ago. That's how little has changed. With a slightly scrunched chart you can't even see the daily candles, which are more like little dojis than anything else. Price has simply stalled below the October 2007 high of 2239.23 after making a high of 2238.92 a week ago. The pattern since then is not clear but it could be argued that price is simply holding up after making a final high on the 22nd. A break below Monday's low at 2208.80 would be a sell signal since it would confirm a break of the uptrend line from August and confirm the final 5th wave of the rally from July has very likely completed. I'll continue to show the possibility for a more protracted choppy rising wedge pattern (bold green price path) until it breaks below 2160. Until it breaks below 2050 there will also be the possibility for just a pullback in January and then a new high (dashed green line). All of this will become a moot point if NDX rallies above 2240, which would be bullish (if it holds above).

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- bullish above 2240
- bearish below 2160 and longer-term bearish below 2050

The RUT has also essentially flat-lined since last week, right inside the 786-794 Fibonacci resistance zone I've been pointing out the past few weeks. Yesterday's high at 793.22, which essentially was a retest of last Wednesday's high at 793.28 (with bearish divergence), fit well for the completion of the rally from November, which completes a 5-wave move up from July, which completes an A-B-C bounce off the March 2009 low. So it has the potential to be THE top or at least an important top. A break below Monday's low near 785 would be a bearish heads up but it needs to break below the December 16th low near 767 to confirm we've seen the high, at least for a couple of weeks. A rally above 800 would be bullish so that's a good stop level on any short plays (with a tighter stop at 794).

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 800
- bearish below 767 and longer-term bearish below 701

I continue to like the RUT as a proxy for the market because of its ability to show the bullishness, or the willingness to accept higher risk, in market participants, especially fund managers. Worry about the bull market will manifest itself in this index. Looking a bit closer at the rally from November 16th, which is the 5th wave of the rally from July, its 5th wave achieved equality with the 1st wave last Wednesday when it hit 792.92. But following that high it pulled back in a corrective wave structure, which looked more like a small 4th wave, and then another rally leg on Monday, which fit as the final 5th wave of the 5th wave. On Monday night I posted on the Market Monitor that we should look for a quick high Tuesday morning to complete the final 5th wave, which is what we got. The quick high was followed by a sharp selloff, confirming the end of the rally. Since then it's been trying to bounce but in a very choppy pattern and then this afternoon's little late-day selloff dropped it below the short-term uptrend line from December 16th. These are all little tiny pieces of the puzzle I'm looking for to help determine whether or not we've seen an important high. I think we've seen the high so any new short plays should use a break of Tuesday's high as a stop, so use 794 (hence the circle-X at that level). This provides a very tight risk for what I perceive to be a high-reward setup on the short side.

Russell-2000, RUT, 120-min chart

Before looking at the other indexes there are three charts that I want to show because of the message I'm getting from them, and they're not bullish messages. The world's economy is inexorably linked together and global trade is a big part of the business of most countries (it's one reason behind the effort of each to devalue their currency as a way to make themselves more competitive against other currencies). Because the various countries are so tightly linked to one another it's a reason why I believe an attempt to diversify by investing in international mutual funds, and especially emerging market funds, is not really diversifying at all. As we saw in the last downturn in 2008, everyone came down together. The rally since March 2009 has seen everyone rallying together, with some outpacing others, such as the emerging markets. But if we see another downturn as part of a longer bear market cycle we could see the emerging markets get hit the hardest (being a higher-beta market).

Just about everyone watches China for signals as to how well its economy is doing. I could go into great detail how their economy is not as healthy as it appears on the surface. Much of their GDP and industry growth (as well as inflation) has more to do with government spending than real income-producing efforts. But the reason the government has kept raising bank reserve requirements and interest rates this year is because they're afraid of a Japanese-style collapse in their real estate prices (which are in bubble land) and other commodity-related businesses.

China is very dependent on the rest of the world buying their products because they do not have enough internal domestic demand to soak up their production capacity. Without a strong external market to which they can sell their products they are at risk of seeing their economy slow down, putting millions of people out of work. People who moved out of the poorer countryside into the cities could quickly become a disaffected and very unhappy group of people, something Chinese leaders are trying to avoid, hence their massive building program over the past several years. How their stock market is doing can therefore be used to determine not just how their economy is doing but also how the rest of the world is doing. A look at the Shanghai Composite index, their stock market, provides a good reflection, if not prediction, for economic performance. And it's showing some cracks in its foundation.

Yesterday the SSEC broke below both its 200-dma, which provided support for the past month, and its late-November low. Today it bounced back up to this line (short blue horizontal line on the chart below) so any continuation lower would leave a clear sell signal. The next level of support is nearby at 2700. This is a must-hold level for the bulls since a drop below the August-September highs would leave a 3-wave bounce off the July low, confirming a correction of the primary trend which is down. I expect to see a continuation lower because the sharp decline in November was followed by a small 3-wave bounce into mid December and it now looks like another leg down has started. The large 3-wave bounce off the July low suggests a move below the July low as the highest probability. And if China heads lower it's a good guess the rest of the world will also.

Shanghai Composite index, $SSEC, Daily chart

Another index to watch is the Baltic Dry Index (BDI), which can help us determine how well the global economy is doing. It is arguably one of the best leading economic indicators for the global economy that we have, one that can help us filter through the noise from a bunch of pundits and economists telling us how good things will be based purely on past numbers. The BDI tracks the cost to ship dry-bulk cargoes around the world and therefore can be a very good indicator of global business. If the demand for bulk carriers increases then so do prices, and vice versa. Because the supply of ships is very inelastic the level of demand has an almost immediate effect on the prices charged for the ships. For this reason many people track the index for telltale signs of global economic health. And like SSEC, the chart for BDI is not looking particularly healthy at the moment and should be of concern to bulls that are hopeful about 2011, or at least the beginning of 2011.

Baltic Dry Index, BDI, Daily chart

The last price on the chart is as of December 24th. The sharp drop in the BDI in 2008 was accompanied by a sharp drop in commodity prices in the same year, which makes sense--less demand dropped the prices of the commodities and the cost to ship them around the world. The bounce off the late-2008 low formed a bear flag or rising wedge correction to the 2008 decline with a series of higher lows and highs. But the decline into June-July broke the series of higher lows and now it's looking like we might have a new downtrend in progress. A break below the July low at 1700 would confirm the downtrend and a likely break below the December 2008 low would be next (since the entire 2009 bounce is only a correction of the previous impulsive decline in 2008).

Normally the S&P 500 tracks closely to the BDI, which makes sense since it's a good indicator of economic health. But we are currently seeing a major divergence between the two and I suspect SPX will do the correcting rather than BDI (the theory being the stock market has been artificially inflated by those who are hopeful the Fed won't let us down, literally). In the chart below, the BDI is the lower (colored line). The middle line is the SSEC and the top line is the SPX. The chart's prices are updated through December 24th so SSEC does not reflect the break of support near 2750.

BDI, SPX and SSEC, Daily chart

The purpose behind putting the three indexes on one chart is to compare one against the other. The BDI, with the series of lower highs, is clearly suggesting weakness in the global economy and the lower high in November for SSEC, from a year ago, followed by a break below the November low, has SSEC confirming the weakness in global dry goods shipping. And then there's SPX rocketing higher into the April high and again since July. Something seems amiss and those who believe in the current rally continuing, well, I've got some land in Florida I'd like to sell you. This divergence will not hold and if BDI and SSEC keep heading south, which I believe they will, it won't take long for the U.S. stock market to follow.

Considering the strength of the rally from July, the backside could be just a fast (if not faster considering declines usually go faster than rallies). That's not a guaranteed move but it's clearly a warning that there's currently a disconnect between our stock market and the signs of slowing in the global economy. A stronger and improving economy in the U.S. does not mean that it will continue to improve. In fact I'll quote a couple of points made by Richard Suttmeir, ValueEngine's Chief Market Strategist and regular contributor to Minyanville. He recently stated the following as part of his themes for 2011:

1. Home prices will continue lower. The Great Credit Crunch began with housing, and that foundation needs repair before Main Street can recover with sustainable job creation and now that QE2 is not working and yields are heading higher - pulling up mortgage rates - the situation can only get worse.
2. Banks still have about $1.43 Trillion in commercial real estate loans on their books and this will require a resolution. The FDIC?s List of Problem Banks rose to 860 in the third quarter of 2010, which is 11.1% of all insured institutions. Some studies show 2,485, or 32%, of all banks are overexposed to Commercial Real Estate loans and 3,938, or 50.7%, of all banks with real estate loan are 80% to 100% funded.
3. Fannie and Freddie, our nationalized mortgage lenders, will continue to drain money because the Treasury will have to provide credit for these mammoth institutions through 2012, at least. So far the taxpayers have spent $150 Billion to shore up these two.
4. Banks are not de-leveraging, at least according to the Notional Amount of Derivative Contracts, which has increased to $236 Trillion from $71 Trillion in 2007.
5. Unemployment will stay above 9% for all of 2011 and, I believe, will stay there until we find a bottom in the housing issues.

Speaking of the Fed's efforts to lower Treasury yields (point #1 above), John Hussmann had this to say in his December 27th market report: "As for the notion that the Fed's targeted Treasury purchases have directly aided the economy, the argument requires bizarre logical gymnastics. It demands one to believe that although the purchases were intended to stimulate the economy by lowering rates, they have been successful without lowering them, and in fact by raising them, because the expectation of lower rates was so stimulative that it caused rates to rise, so that the higher rates can be taken as evidence that lowering rates without lowering them was a success. Oh, brother."

Hussman further commented "As of last week, the Market Climate for stocks continued to be characterized by an overvalued, overbought, overbullish, rising-yields conformation that has historically been very hostile to stocks." I think Hussman should learn to stop beating around the bush and tell us how he really feels about the stock market (grin). He typically goes into great detail about stock valuations and a plethora of economic indicators. The bottom line is that he feels the market is priced to better than perfection and probably will have some trouble meeting the high expectations of the market next year. He titled his December 27th report "A Fed-Induced Speculative Blowoff".

We try our best to determine the odds for which direction the market is likely to head and when I review the charts above along with some of the comments by analysts I respect, I think the odds have shifted in the bear's direction so be careful--I think the U.S. stock market rally is long in the tooth and on borrowed time and we're not seeing signs from things like the BDI to support our rally. I'm not bearish the stock market just because I feel like being bearish. There are strong indicators that point me in the direction of the bears, even if I've been early to the bear's camp (where it's very lonely right now).

One commodity that's a good measure of economic health is copper. If China's stock market and the Baltic Dry index are both pointing towards a global slowdown one would expect it to be reflected in copper prices, but so far you'd be wrong making that assumption. The trouble with commodity prices is that they can experience spikes to the upside that become more emotionally driven than fundamentally driven. When looking at some of the bigger macroeconomic indicators, like the BDI, I think we might be seeing an emotionally driven high in copper as price has gone parabolic since the June low. There is also a rumor that JPMorgan has accumulated a huge stockpile of copper (and silver) in anticipation of launching their copper ETF.

It will be interesting to see what happens if it reaches the tops of two parallel up-channels, one from December 2008 and the other from June, both of which cross near 444 in the 2nd week of January. Coincidentally(?), a trend line across the highs from 2006 and 2008 crosses the same level at the same time and price. Since it will count well as a completed A-B-C bounce from 2008 at that point I could be tempted to short it there if tagged and reverses. One way to play copper, until JPM's new copper ETF comes out (which many will be buying so you can short it along with JPM, wink), is to trade JJC, the DJ-UBS Copper ETN, which has options (but a little thinly traded). But the point is that copper may be nearing a peak and a reversal back down would get it in synch with the larger picture emerging from China and the BDI. And FWIW, I'm seeing similar potential topping patterns in other commodities such as home heating oil (HO), coffee (KC) and sugar (SB).

Copper contract, HG, Weekly chart

Another good symbol to watch when it comes to judging the level of desire for higher-risk products is the High Yield bond fund, HYG. This is essentially the junk bond index and a high demand (with higher prices) for this fund indicates less fear about owning higher-yielding securities. That's bullish but at some point you have to wonder how much complacency is making it more dangerous. I remember discussing the same thing about mortgage-backed securities back in the fall of 2007. The weekly chart of HYG shows price stopped at the level where it suddenly broke down in September 2008. From that high in early November 2010 it dropped down below its uptrend line from March 2009 and has bounced back up to it (and its previous highs in January and April).

iShares High Yield Corporate Bond ETF, HYG, Weekly chart

Looking at the daily chart of HYG below, the sharp decline in November has been followed by a 3-wave bounce that not only retested the broken uptrend line but it also retested the January and April highs of this year, near 90.30. Following that test of resistance it gapped down on Tuesday and closed below its 50-dma. It bounced back up today so no harm, no foul so far but unless it can climb above resistance near 90 (which would be good for a run up to its broken uptrend line) the pattern is set up for at least one more leg down to match the November decline. A decline below the mid-December low at 88.78 would indicate the bounce is over and new lows are coming. A breakdown in HYG would be a strong indication that the stock market will follow (if it isn't already). If it continues to hold up in January we could see the stock market doing the same, especially if commodities in general push higher into at least mid January. So keep this one on your radar.

iShares High Yield Corporate Bond ETF, HYG, Daily chart

Treasuries had sold off yesterday but bounced back up today. The TLT is a good proxy for the longer-dated Treasuries and after completing a 5-wave move down from August to December it should see a larger bounce into January/February to at least correct part of that decline. There's a good chance that today's bounce will lead to a move up to the top of its parallel down-channel, near 95. Eventually, as depicted in green, TLT should break out of the down-channel and probably head for 100 (although it could be a choppy path to get there). TLT remains at least short-term bullish as long as it remains above its December low at 90.47.

20+ Year Treasury ETF fund, TLT, Daily chart

The banks were relatively weak today, staying in the red practically the whole day. While I see a little more upside potential in BIX to a Fibonacci zone at 153-154 (closed at 149.10), BKX is struggling with its 62% retracement of the April-July decline, at 52.67. It almost hit it last week and tried again yesterday and today, with a high of 52.62 (this morning). Is that close enough or will there be more. If the banks persist in being weak and the broader market turns down then the banks could lead the way.

Banking index, BIX, Daily chart

The TRAN is another index that just won't give it up, but won't make any further headway either. It's either a bullish ascending triangle that has formed since early December or there's a bearish shallow rising wedge that has formed since mid December. Some Fibs on the daily chart point to potential upside at 5125-5148 while the shorter-term pattern (for a rising wedge) points to 5123 for a final high, matching the 5125 projection on the daily chart (where the 5th wave of the rally from July equals 62% of the 1st wave). The bulls need to rally TRAN above 5150 to open it up to 5250 (top of larger rising wedge) and 5375 (5th wave = 1st wave). A drop below Monday's low near 5058 would signal we've probably seen the high, confirmed by a drop below 5011.

Transportation Index, TRAN, Daily chart

The U.S. dollar has kept both sides guessing ever since it pulled back from its late-November high. It's flirting with what should be support at 80 but keeps threatening to break it. If it continues lower from there I think there's a good chance we'll see about 78 before it resumes its rally (dashed line). A rally above 80.85 will signal the next rally leg is already on its way. In either case I'm expecting higher highs for the dollar as we head into January but based on what I'm seeing for the metals I'm leaning towards a quick pullback before the dollar resumes its rally.

U.S. Dollar contract, DX, Daily chart

Gold appears to be on track towards what should be its last high, up around 1450. The ending pattern that it's in will make for a high-confidence short play in gold and we'll see how it looks next week. If it tags the 1450 level between now and next Wednesday and turns back down I'd try a short play with a stop just above the high that it makes. Ideally we'll see a brief throw-over above the top of the rising wedge pattern and then a drop back inside. If anytime from here gold drops below 1370 it will indicate the high is already in place.

Gold continuous contract, GC, Daily chart

Silver also looks good for one more new high, having thrust upward out of a sideways triangle pattern for December's price action. This triangle points to the last move for the rally and I've got an upside target around 32.00 to 32.50. A break below the triangle, at 28.80 would indicate the high for silver is in.

Silver continuous contract, SI, Daily chart

Oil has been pushing marginally higher towards what I think will be an important top around 94-95. The weekly chart below shows the trendline intersection near that level and makes for a good reversal setup at that level. A rally above 95 would be bullish and a drop below the December 15th low at 86.83 would be a bearish heads up that the top is in. Below 80 would confirm it (confirming the break of its uptrend line from March 2009).

Oil continuous contract, CL, Weekly chart

Tomorrow's economic reports that could move the market include the Chicago PMI and Pending Home Sales, especially with the lighter volume we're seeing. With the market set up for some downside follow through, if we've seen some important highs, we might see a negative reaction to the numbers.

Economic reports, summary and Key Trading Levels

Sentiment cannot be used as a market timing tool. Bullish sentiment, and sometimes bearish sentiment, can last a lot longer than most traders think. Only in combination with other technical tools can it help add or subtract confidence in a setup. Right now I'm thinking sentiment is adding confidence to the idea that the market is at or approaching an important high. Past peaks in bullish sentiment have coincided with tops but the pullbacks are different, as can be seen in the chart below. This is a chart of the spread between bullish and bearish sentiment and when the spread widens to 30% or more it has often coincided with marked tops in the stock market. Above 40% increases the likelihood for a top and the last reading (December 23rd) was 47%, the highest it's been since 2004.

AAII Bullish-Bearish Sentiment, Weekly chart

As you can see in the chart, high readings in an uptrend, especially a new one, may only lead to small corrections. But high readings at the top of an uptrend and the tops of bounces in a downtrend lead to some wicked selloffs. It's anyone's guess as to what kind of correction will follow the top of this move but are you willing to just ride it out and hope for the best?

The other sentiment indicator that clearly hasn't been useful for timing the market is the VIX. But again, with a very low reading, along with the uber bullish sentiment, it's warning of potential trouble for the bulls. But a low reading is only a caution flag and not a guarantee of a reversal.

The one thing that currently has my attention on VIX is the throw-under below the bottom of a descending wedge starting from the May high followed by this week's gap back up inside the wedge. This creates a buy signal for the VIX (sell signal for stocks) but still needs confirmation with a move above the top of the wedge and its last bounce high at the end of November at 23.84. Just be aware that that kind of move in the VIX would likely be accompanied by a sizeable pullback already in the stock market. At this point it's simply another piece of the puzzle that's telling me a top for the stock market rally may be upon us.

Volatility index, VIX, Weekly chart

And all of these pieces of the puzzle are coming together at the time of year when we've seen plenty of market tops. This weekly chart of SPX shows the number of market highs in late December and early January (with a couple of outliers in late January or February). As you can see, not all of them were important turns or even resulted in much of a pullback, which could continue to be the case with a coming pullback. It's just that all the other pieces are telling me the coming top could be an important one. So I'm merely throwing out a cautionary warning; let's be careful out there.

S&P 500 with noted highs in December/January, Weekly chart

And with that I'm all charted out. If you've hung into the end with me, thanks. Good luck for the remainder of the year and into the first couple of days next year and I'll be back with you next Wednesday. Have a very happy (and safe) New Year's holiday weekend.

Key Levels for SPX:
- bullish above 1277
- bearish below 1232 and longer-term bearish below 1173

Key Levels for DOW:
- bullish above 11,700
- bearish below 11,420 and longer-term bearish below 10,900 (price low as well as 200-week MA)

Key Levels for NDX:
- bullish above 2240
- bearish below 2160 and longer-term bearish below 2050

Key Levels for RUT:
- bullish above 800
- bearish below 767 and longer-term bearish below 701

Keene H. Little, CMT

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