The first chart is a NYSE Oscillator weekly chart that shows severely overbought indicators. An oscillator for the oscillator, ULT, is above 70, which is rare. The other three indicators, above and below the price chart, are also severely overbought. The four-week MA is at 39.85, which is in the region where the market is about to consolidate or start a downtrend (also shown in older charts).
The second chart is an SPX daily chart that also shows severely overbought conditions. Major resistance continues to be around 1,270 (upper monthly Bollinger Band). The first major support level is the 10-day MA, currently at 1,247 and rising. If SPX begins a consolidation next week, it may fall to the 10-day MA, which will rise to around 1,255 by the middle of next week. Also, 1,253 is a multi-year Fibonacci level.
There are many economic reports next week, following the Thanksgiving holiday week: Monday-Existing Home Sales, Tuesday-Durable Goods Orders, New Home Sales, Consumer Confidence, Wednesday-GDP, GDP Chain Price Deflator, Chicago PMI, Oil Inventories, Fed's Beige Book, Thursday-Personal Income, Personal Spending, Construction Spending, Unemployment Claims, Auto Sales, ISM Index, Friday-Nonfarm Payrolls, Hourly Earnings, Unemployment Rate.
The market may fall into a volatile trading range next week. A lot of positive news was priced-in recently. However, inflation remains an uncertainty, although the market has been pricing-in the end of the monetary tightening cycle. Moreover, gasoline prices are still high, although down from their peaks, which may slow consumption growth.
Charts available at Forum Index Market Overview section.
Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e. g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.
Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.