November 25 - Market Commentary

The bear in me is still not dead and it surfaces to when I look past the media information and concentrate on what the chart is telling me. Everyone seems to be overwhelmed with massive amounts of data: the fluctuating unemployment rate, retails sales, home sales, mortgage and credit card delinquencies, etc. So far this has all lead to rallies in the market, but where is it going.

I am in the camp that says the bulls are losing steam in the short-run. Looking at the daily chart of the S&P500 below, the technicals point to a local weakness in the bulls. The tops are getting closer together as it becomes harder to push to new levels. Volume, MACD, and RSI indicators are all in downtrends.


As many who have been following my blog know, for some time I have been selling far-out-of-the-money calls to capture the slow down and possible downturn of the market. Looking at the technicals, I think that the time for a halt of rally has come. Will we have a traditional "Santa Clause" rally at the end of the year or will we see profit taking which will slow down or even end the rally.