The start to the week was interesting as futures favored the bears in Sunday night trading before a massive turnaround ahead of Wall Street’s open on Monday. We mentioned the 150-point swing in our midday update and although the bulls had a strong day, volatility remained elevated heading into the Fed’s midweek FOMC meeting.
Tuesday was a flat day and we mentioned the next triple-digit move in the Dow could set the next trend. While most of our indicators were pointing towards a breakout there were a few bearish signs that needed to be cleared. Futures were up on Tuesday night and with the slick-talking pros calling for a pullback, the recipe was ripe for a massive breakout.
Wednesday’s session was choppy ahead of the afternoon announcement and when the Fed actually did taper, the market soared. We have learned over the years when there is too many people leaning on one side of the boat, it tips over. The breakout to new record closing highs sent the bears running for the exits as the bulls held the majority of their gains.
Thursday’s session was a rest day and a slight back test to support that had served as prior resistance but mentioned December option expiration day has been bullish over the past 30 years. Friday’s surge to our yearend fluff targets capped off a wonderful week and with just 6 trading days left for 2013, we are closing in on our sixth-straight year of profits. (continued…)