WEEKLY MARKET UPDATE

Sorry for the late post this week.  I got the blue screen of death (hard drive issues) earlier this past week which set me back a few days.  Last week I posted a quarterly chart of the SPY which gave clear evidence of the strength of the long term up trend.  This week I thought I would post a monthly chart of the SPY.  As you can see this chart also points to a clear distinct up trend.  It is analysis of the monthly chart that plays a very important role in confirming long term shifts in trend.

CONCLUSION

Nothing much to add to my commentary of the previous two weeks.  The long term and intermediate term up trends remain very much intact.  In addition, it is very typical for markets to rally just prior to a holiday. Have a great Thanksgiving.

WEEKLY MARKET UPDATE

Both the long term and intermediate term trends remain solidly up.  For the past several weeks I've been posting a weekly chart of the SPY.  The weekly chart is basically the lowest time frame chart I use for determining intermediate term trend strength and for helping to confirm longer term trends.  Any lower time frame charts contain too much random movement and IMHO don't give a reliable picture of trend.  In fact, even the weekly chart is often too noisy for my taste.  Most of my analysis for determining the long term trend and likely intermediate term reversals is done on the monthly and quarterly charts.  Today I thought I would post a quarterly chart of the SPY to give you another perspective on the strength of the long term trend.  Each bar on this chart represents price movement on a calendar quarter basis.  The last currently developing bar is for the period September 1 - November 15.  This bar will complete on December 31.  As you can see there have now been two consecutive quarters where the market has closed above the previous all time highs in 2000 and 2007.

CONCLUSION

As I've stated in previous posts the market is still very overbought and susceptible to an intermediate term correction if the other metrics confirm, but the long term trend is very much intact right now.  

WEEKLY MARKET UPDATE

As most of you may be aware on Thursday the market sold off very hard on high volume only to rally nearly as strongly on Friday on high volume.  As you can see in the weekly SPY chart the market closed higher than last week.  What to make of this?  On a daily basis the market has clearly gotten more volatile and choppy but on a weekly basis the market continues to grind higher.  On a longer term basis I look at four metrics to confirm trend reversals.  One of them is whether the market is overbought (in a rising market) and oversold (in a falling market).  The market is CLEARLY overbought right now.  But price action is favorable; on a weekly and monthly basis the market continues to make higher highs and lows.  Sentiment remains bullish and there are no major resistance levels blocking any further up side advance.

CONCLUSION

The market is still clearly bullish on a long term and intermediate term basis; but is way overbought and due for at least a mild correction.  All it would take is for a confluence of other metrics to line up to make this happen.  IMHO now would be the time to be cautiously optimistic, increasing exposure to the market only as it proves it can move higher, and be quick to reduce positions when the intermediate term picture becomes bearish.

WEEKLY MARKET UPDATE

The long term up trend remains very much intact as does the weekly.  For the third straight week the SPY closed higher than it's previous all time high made in September.  However, as you can see by the latest price bar the market did not make a lot of headway; closing barely higher than where it opened on Monday and just above where the market closed last Friday.  If you are a student of Japanese candlestick charts you'll recognize this bar as a "near" doji or indecision bar.  Next week's price action will tell us a lot about the future direction of the market on an intermediate term basis.  If the market declines below the low of this week's bar the likely direction of the market will be to at least test the highs made in September.  If that does happen and the market declines below that level, then the market would likely continue down into the trading range between the upper and lower green lines.

CONCLUSION

By next week's post I will begin posting intermediate term signals as they occur based on my methodology.  I should stress that the purpose of this chart should not be whether to decide whether one is 100% in or out of the market; but rather whether or not one may want to consider hedging, increasing or decreasing one's position in the market.  The decision to be in or out of the market should be made based primarily on the longer term trend signals.  Have a great weekend everyone.  GO BLUE!