It has been a couple of weeks since I last posted on the SPX daily. As expected, traders
could not resist pushing the index up to a new round number all - time high of SPX 1800, but
upward thrust ended quickly as Nov. closed out. The sharp trend line up from the Oct. 8
interim low has been broken here in early Dec. and whatever else you might have in mind,
it is usually wise to observe the market more carefully once such happens. SPX Daily
The recent action is consistent with either a consolidation phase or the outset of a price
correction. Regarding the latter, we have yet to see the kind of breakaway price movement
that would herald something nastier.
As indicated in the post on the weekly chart just below, I expect more volatility in the
market between now and the end of the year as players appear very sensitive to whether
economic data is strong (bearish) or tepid (bullish), and also as to whether there will be
further bad behavior from official Washington. The handicapping of the prospect for how
long QE will be extended based on economic data flow may remain intense.
The next Fed policy meeting is set for Dec. 17 - 18. Since it would be un - sportsman like
conduct for the Fed to throw in a 'taper' plan a week ahead of Christmas, we may have to
keep our breath baited until the next meeting in late Jan. 2014, to get the whole enchilada
on Fed thinking.
I did add the VIX volatility measure in the bottom panel of the chart. Should there be a
move up toward the 20 level in the weeks ahead, it may suggest the betting is swinging
toward an early rather than a later curtailment of QE. I plan to discuss the QE issues in more
detail closer to year's end.
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