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“Trump Rally” Fading December 3, 2016

Posted by Tom in Thoughts.
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Dec. 2, 2016 – Well, “all good things must come to an end” and right now it looks like the recent “Trump Rally” is indeed slowing down.  Nothing could continue at this rate for very long anyway.  On Friday the NASDAQ (below) stopped at near the 5342 level, which is a minor support area.  Notice the narrow bar where buying = selling and the indicators that show that the buying enthusiasm is in fact slowing down.

nasdaq

The next question: is this just a pause or the start of a different trend?  Right now, no one can say for certain.  If the indexes rally back up, what type of volume do we see?  Wide spread bars on at least average volume would be Bullish and indicate this is just a pause.  However if we see continued weakness, especially wide down bars on high volume that would be Bearish.

It’s hard to get too Bearish at this time of year which is a traditionally Bullish season for the markets.  So we may just bounce around in here and wait for the New Year (that’s my guess).  What appears to be doing well are Banks, Oil Services, Oil, Japan, Basic Materials and Financials.  The Energy sector is very volatile, so caution is advised.  Many of these sectors have come up very quickly and that’s a concern too (late in the moves?).

Overall the very broad S&P 1500 stocks look fairly positive right now.  Many are in Accumulation modes –

a-d

And many have strong Price Strength as well:

price-strength

My biggest concern in here is that the stocks that I see as candidates to accumulate appear to have significantly slowed that accumulation.  The bottom line is they are “long in the tooth” and many folks have already gotten on board.   The next phase can either be a re-accumulation phase (more money coming in) or distribution (selling).  Right now things appear to be in equilibrium.  Let’s keep an eye open for signs of change.

Happy Holidays and have a good week.  ……….  Tom  ……..

Price chart by MetaStock; pie charts by http://www.HighGrowthStock.com. Used with permission.

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