Beware of Pullbacks

After setting a series of all-time highs it equity markets may be ripe for a trader’s pull-back. This is typical any time there’s been a material run up in the markets.

While the climb has been orderly, the SPX is showing over-bought characteristics at these levels. Based on our numbers, a pull-back toward the 3035-3050 level would be typical after this kind of move.

This pull-back would also be in line with the bigger overall projection for 2019. In fact, based on projections from nearly a year ago (which is so long ago in market time as to be barely relevant anymore), the SPX has exceeded expectations for 2019.

For the week, the market may yet trend higher. In fact, this may be a good week for the markets as it’s the last full week before the holiday season starts to rev up. But things may start to get dicey once we get into the short Thanksgiving week.

Trying to predict how much higher an all-time high trend goes before a pull-back — especially in light of the circus that is Washington these days — is pretty tough. For now, since there really isn’t any ‘resistance’ in this market, we’ll just have to see how over-bought things can get.

“It’s Christmas Theo. It’s the time of miracles,” Hans Gruber, Nakatomi Plaza, 30th Floor

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