The market sure did close the week out in style. The Dow’s winning streak now stretches for an unbelievable four weeks, including a jaw-dropping statistic that the SPX has not had back-to-back don days for 19 sessions now. That is truly amazing.
There has been a definite change in attitude in the markets and optimism is rapidly spreading. The SPX easily broke out to four-month highs and looks poised to move even higher. We’re beginning to hear chatter that optimism is too high and that a pullback is imminent. That’s certainly something to keep an eye on but we are finally starting to see the much talked about “money on the sidelines” begin to come back into the market and that could help extend this rally. We’re seeing equity accumulation.
Now that we have broken out above the 1130 resistance, the close we get to the year-end, the more we’ll see money managers come in with new money, afraid to miss a potential year-end rally.
We will look at 1131 as support on the SPX and we will use 1065 as overhead resistance. As you can see, we still have a ways to go before we hit that resistance and we remain bullish, but we are susceptible to short and sharp pullbacks.
Weekly Economic Calendar:
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