With the remaining trading days of the year dwindling into single digits this week, expect this week to be a push for the end of the year. It’s basically the last full week of trading we’ll have. After this, volumes typically start to drop… not to say the markets won’t move higher or lower on low volume (they absolutely DO in many cases), but it is to suggest much of the news for the year — including gains distributions — will be dialed. Markets will be shifting their gaze to 2021.
As markets look ahead, you can basically roll back about a week, read the prior BigFoot Blog, and get a sense of what’s going on. Little has changed. Last week some momentum bled off, but the larger up-trend remained intact.
For this week, the question is whether we’re looking at a sideways range or a break-out toward new highs. The futures movement indicates a move to the higher side of things, with the S&P 500 still eyeballing the 3800 level. The technicals are a little more benign, caught between a sideways trend and an up-trend.
Given last week’s meh performance, the SPX may be shooting for closer to 3757 for the week (a move higher, but at the lower end of the current trend). Rarely has this market followed trend this precisely. And there are still two shortened trading weeks to follow where any little bit of good news surrounding stimulus out of DC could cause the markets to pop.
Keep in mind, it’s the short weeks that exaggerate market behaviors sometimes. The theme of 2020 seems to be a big more negative (no shock there), so there’s about a 50/50 shot (total technical swag guess on the percentages here) that the markets publish their highs for the year this week, and we move sideways from there.
Interestingly enough, the data last week barely moved. The BigFoot Database percent-long, along with much of the other technical indicators, was nearly unchanged. About the only thing worth noting is we’re less over-bought.
Given the lack of change, taking a step back and looking at the larger theme implies the market is still seeking a higher move. Since the negative of last week was not a powerful decline, we may see more of a pop higher this week… If futures are an indication, Monday should open strong. We’ll see if Washington provides any additional excitement to push things higher.
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