It may not be a surprise to learn than the market flows in waves. Whether you are looking at 1 minute charts or 1 month charts. The waves that show up are very evident. What I find interesting on a daily chart, is how you can often see that after two weak days showing red across the board as in the last 2 days, there is suddenly a recovery.
Now, can I be absolutely sure about a recovery tomorrow, no I cannot. No one can because the proverbial happens sometimes. Whether it be a natural disaster or a horribly tragic event like the recent loss of a plane. We cannot in the short term tell what will happen next with certainty, as any normal sequence can be interrupted by the chaos of events and there portrayal in the media. However, most often we can use history to read the tape and know what to expect under normal circumstances.
Therefore, it is still my expectation that after 2 days of selling that we will now be allowed to wave up and approach the 2100 target I have for the S&P 500. In my humble opinion the bullish nature of this time of year added to the fact that there are no potentially significant negative reports before next week will help push the market to higher prices.
Of course, with all that said, it is just an opinion, and my opinions do not influence my trading plan which is mechanical and non-emotional…unlike me! So I may continue to think, but I must not act on this experience or intuition, no matter how many times it turns out to be true.
U.S. stocks closed down in low volume trade on Tuesday, pressured by weakness abroad and a sharp decline in the utilities sector.
Composite volume held near 2 billion on the New York Stock Exchange, below average levels.
Other analysts did not see any apparent reason for the slide of as much as 2.2 percent in the traditionally high-yielding sector, especially since bond yields were also on the decline.
The Dow Jones Utilities Average also traded lower, off Monday’s closing high.
Concerns about Greece’s failure to elect a new president on Monday continued to weigh on global markets on Tuesday, with Asian and European stocks closing down 1 percent.
The December reading of the Conference Board’s consumer confidence index came in slightly lower-than-expected at 92.6.
Earlier, the Case-Shiller house price index for October showed that U.S. single-family home prices’ rate of increase continued to decelerate in October since the stronger-than-expected rise seen in the previous month.
7 a.m.: MBA purchase applications
8:30 a.m.: Jobless claims
9:45 a.m.: Chicago PMI
10 a.m.: Pending home-sales index
News Sources: CNN Money & CNBC