The S&P 500 had a slightly positive session on Tuesday, as we continue to dance around the 2650 level. The uptrend seems to be very much intact.
The S&P 500 rallied during the trading session on Tuesday, reaching towards the 2650 level again. We had fallen on Monday to fill the gap, and now it appears that the gap is going to hold as support for the longer-term move. Because of this, a break above the 2650 level should send fresh money into the marketplace, looking for a breakout to the upside yet again. At this time of year, you quite often get the “Santa Claus rally”, which is simply larger money managers trying to buy stocks to show clients that they are in fact invested in something. Managers that have not done well this year will be chasing returns frantically, to get the right amount of return for their clients to keep the business going.
We have algorithmic trading that is also keeping the market afloat as well, and I think that the machine trading will continue. That being the case, I like buying pullbacks in the S&P 500 but I also recognize that there is a lot of noise in the marketplace, with a lot of focus being on the US Congress passing some type of tax bill. Ultimately, the market should continue to go higher if we get signs of progress. Alternately, if we fail to get that passage, that should be very negative for stock markets. Currently, it looks as if the corporate rate is going to be 20% in the United States, which makes it very competitive with the rest of the world, thereby having the S&P 500 looking cheaper than it did just a few weeks ago. Ultimately, the 2600 level is the “floor” in the uptrend.
MORE WILL UPDATE SOON!!
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