November 20, 2009
The S&P 500 Index (SPX), and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY), both reached new closing highs this week, but on Thursday, November 19, both reversed and erased all their weekly gains.
This same pattern occurred last week with a sell off on Thursday, followed by a partial recovery on Friday and then a huge rally on Monday.
They say the stock market rarely repeats itself and we agree. But even though the major indexes lost ground on Thursday, we must keep in mind that they closed at new 2009 highs only the day before.
Until there is a confirmed down trend, the stock market remains bullish. It has been climbing a wall of worry for weeks now and few think it can continue much higher, but the trend remains up. If you are a contrarian, bearishness is good news.
Note also that the coming holiday weeks are typically bullish for the stock market.
For now, we would still be looking for higher highs in coming weeks, but all the while keeping a close eye on the charts for signs of a down turn.
The http://www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRs.