After a weak opening, the S&P500 ($SPX) rallied into the Christmas Holiday, closing 2.3% higher for the week.
2021-12-26-SPX Trendline Analysis - Daily
The ADX directional indicators flipped again mid-week, from bearish to bullish. The frequent change in direction (i.e. whipsaws) is the main reasons not to rely on any single signal.
Price/volume is back to an uptrend. The index opened trading below the 50-day moving average, then rallied to an all time closing high on Thursday. Since confirming the rally, the index has 2 distribution days.
2021-12-26-SPX Elliott Wave Analysis - Daily - Primary 1
For Elliott Wave, the signal remains in an uptrend. With the SPX closing at an all time high, probability favors a completed Minor 2 at the December 3rd low.
For the current wave pattern, the typical Fibonacci level for a 3rd wave is 1.618 of the 1st wave, putting the target level for the Minor 3 just above 5200.
A surprise to no one, last week's consumer prices data for November showed increased prices year over year. Spending and income data were also slightly higher.
In spite of these seemingly negative headline numbers, the "Santa Claus" rally appears to be right on time. It's the traditional post-Christmas rally in stocks, during the final five days of the current year and the first two trading sessions of the new year.
Blessings to you and your families this holiday season. Thank you for the gift of your time each week.
Merry Christmas & Happy Holidays!
Charts provided courtesy of stockcharts.com.
Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.
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