On December 27th , 2011, I wrote that I expect the SPX to go up in the 1st week of New Year. (http://bbfinance.blogspot.com/2011/12/final-friday-of-2011.html )
Just be careful of the bulls**t that goes around. Today they tried their best to scare people in many forms and when nothing worked, they started beating the drums of war with Iran. Let’s get the facts straight. There will not be any war tomorrow not even in the next six months. OIL will top in the range of $105 and GOLD around $1620 before we see correction again. It is a function of US $ and Dollar index made a double top and dropped. The momentum is downward.
All the pseudo economists are screaming their heads off with macroeconomic and fundamental analysis to trade the stock market. I would suggest to them that simply follow the FX. If AUD is gaining strength, then things are happening in China and Asia which we are not aware of and may not know for many months. So forget the news and see the price action. Correlate and trade. I expect AUD is gain further strength and reach around 1.05 before it runs out of gas.
When Santa rally started, my target was +/- 1300 in SPX and time was up to 1st week of January 2012. We are now 25 points away and only few more days left. So basically we are running out of time for this cycle top.
I hope I am not confusing you will all these lines. Simply stated, the SPX is in a rising channel and it has to break 1284 convincingly before it can reach the target of 1310. I was hoping that it would be able to break 1284 today but that did not happen. The intraday pattern is not very bullish but the trend is up. That lines up with my theory that we are running out of time for this cycle. But DOW has broken its October high and DOW leads. Overbought can stay overbought for some more time and there may be a bit more upside left in the rally. VXO / VIX have some more room to the downside.
On the whole, I would think that there is still some juice left in the rally but be ready to pull the trigger any time. Seasonality factor says that we have two more days so no more chasing the bus.
Thank you for following me in Twitter (@BBFinanceblog). Please retweet to your family and friends and visit http://bbfinance.blogspot.com/ to profit from the world of finance.