There really haven’t been any new developments to report lately so I just wanted to reiterate my thoughts on where things currently stand.  As discussed in the last market overview video from Nov. 30th, some of the key levels that I have been watching are:

  • The top of the resistance zone on the $SPX at 1425 (which could run as high as 1430).  On Dec. 3rd, the next trading session following that video, the S&P 500 managed to push as high as 1423.73 before pulling back.  Although prices are making another run at the resistance zone, they have yet to break above it.
  • On the $COMPQ, I mentioned the 3030 level as key resistance and prices turned down after peaking at 3030.28 also on the following trading session back on Dec. 3rd.
  • On Nov. 26th, I outlined three key resistance levels on AAPL and stated my primary scenario was for prices to turn down at the first resistance level (590-591ish level), where prices struggled with for six consecutive trading sessions before turning lower and sparking the largest one-day sell-off in AAPL since the bear market in 2008.

Now what?  Well so far, the fact that prices reversed from the levels and remain below keeps the primary bearish scenario intact. However, the markets are attempting to make another run at those key levels and a break above by all three (SPX, COMPQ & AAPL) would put a dent in the bearish scenario but not by any means eliminate it.  One other thing that I have been watching is the $NAAD (Nasdaq Advancing vs. Declining Issues).  For years I’ve found this to be a fairly reliable confirming indicator when used with other criteria, such as pattern or support/resistance breakouts.  In the case of an existing downtrend in the market (and $NAAD) such as we currently have in place, I’ll use a break above the $NAAD downtrend line as a bullish signal.  Conversely, this signal also works well as a bearish sell signal when downside breaks of uptrend lines in the $NAAD occur during an uptrend (again, when confirmed or supported by other metrics).

To tie all this together, the $COMPQ and $SPX, although still below the aforementioned key resistance levels, are moving higher once again after pulling back following the initial failure there and may or may not have built up the energy to take them out on the next attempt.  AAPL continues to lag considerably which for now, doesn’t help the bullish case.  However, the $NAAD, after recently failing to surmount it’s downtrend line, is currently positioned just below and would likely confirm a buy signal IF the broad markets also take out their key resistance levels.  However, resistance is resistance until broken and as such, I continue to maintain a bearish bias, both near-term and longer-term and will adjust accordingly if the charts convince me otherwise.