As mentioned early in the week, I expected the market to drift up late in the week as "holiday trading" rules kicked in. With the big boys off in the Hamptons, and volume light, U.S. markets seemingly always drift up on light volume or at worse hang around in a neutral stance near holidays. (The pre Thanksgiving trade is notorious) With the oversold conditions the market was facing (along with poor sentiment) it was becoming a good bet the normal holiday trading effect would kick in and it has.
(Click to enlarge)
The action did start one day earlier than I anticipated, and hence the S&P 500 has been able to move over the 50 day moving average and now is grappling with the 20 day. It remains a chopfest out there where most active traders are simply skimming in and out of positions, waiting for the next intermediate move. For bulls the game remains the same - a new higher high would be positive i.e. a move over 1345ish. For bears, breaking back below support and indeed breaking the intraday lows of the week (1312ish) on a closing basis, would help their cause. In between those two areas is just a ton of meaningless ping pong.
If the action continues like this through mid next week, some of the relatively extreme oversold secondary technical indicators will be relieved. The dollar now has been turned back at the resistance we mentioned yesterday, down by half a percent; therefore the same tiring anti-dollar trades are on.