Better Than It Seems

End of Day Update:

It was another good day for the S&P500 as it continued Monday’s rebound from 2,000 support. In typical fashion volume is trailing off as we approach the Christmas holiday. Since so many institutional money managers are on vacation over the next two-weeks, we cannot read too much into these daily gyrations because they are driven by “home gamers” overreacting to every move as if it is the next breakout/breakdown. It won’t be until January when we have the full force of the market giving us more meaningful data to interpret.

That being said, it is constructive to see last week’s selloff stall and bounce at support. That reaffirms the lack of owners willing to emotionally react to every spooky headline or drop in price. No matter what the “experts” think we should do, if owners don’t sell, it is difficult to kickoff the much-anticipated correction. The longer this market refuses to breakdown, the more likely it is the next leg will be higher.

Jani

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