A Wild Week For The Market

Market Overview

The week of Thanksgiving, during which stocks traded in a narrow range, must have been the calm before the storm for the stock market. Shortly after Wednesday's opening, the SPX started a two-day decline of sixty points which ended abruptly at the close of Thursday and was followed by a forty-four point rally on Friday. Talk about volatility! Several factors contributed to this yoyo action: a speech and testimony by Janet Yellen, Thursday's ECB decision on interest rates and monetary stimulus, and Friday's jobs report. By the close on Friday, the rally looked tired, and a short-term reversal would not be surprising on Monday/Tuesday.

Gold looked as it was ready to end its long decline last week. After making a new low and reaching my long-standing projection of 100 on Wednesday, GLD reversed sharply over the next two days. Since this low is being made in conjunction with the bottoming of an intermediate cycle, higher prices look likely in the next couple of weeks. I'll discuss it in more details later on.

In spite of the sharp reversal on Friday, it is possible that SPX has started a decline of intermediate nature although, until confirmed, a new high is still possible. If so, this should become apparent over the next couple of weeks.

Intermediate Indicators Survey

Both the weekly MACD and SRSI may be starting to roll over.

Instead of posting a chart of the NYSI, I am going to show you one of the McClellan oscillator (courtesy of StockCharts.com). I want you see what effect Friday's 44-point rally in the SPX, had on breadth. At no time during the trading day did the A/Ds exceed 1040+, and this was reached in the second hour of trading. After a short consolidation the rally resumed, but the A/Ds remained in the 800/900s even though it tacked on another 23 points!