By Dominic Picarda.
Just as retailers seem to start putting out their Christmas wares and decorations earlier and earlier every year, traders begin talking about the “Santa Claus” rally well in advance. I saw the first reference to the prospects for a late December rally earlier this week, before the Halloween paraphernalia had even yet been put away! Personally, I would rather focus on the here-and-now, rather than trying to extrapolate several weeks out. For now, the indices still have some near-term upside potential, despite having already reached overbought daily levels at some point this week. I am treating the latest pullback as a buying opportunity, in advance to a move on new highs.
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S&P 500
I was looking to buy a bounce off the 13-fourhourly EMA, but the S&P went further than that in the event. Still, despite a crossover of the 13- and 21-fourhourly EMAs, the trend remains bullish here for now. I am sticking to my call for a renewed burst higher to 1797.
Support: 1740.7– Resistance: 1807.2
Support: 1723.7 – Resistance: 1797.2
Support: 1695.6 – Resistance: 1782.1
Support: 1690.7 – Resistance: 1767.1
DAY: I’d buy a bounce back through the 13-EMA.
POSITION: Stay long.
Dominic Picarda CFA, CMT writes the Trader column at http://www.investorschronicle.co.uk/comment/the-trader