Sunday Update: 17 November 2019

We just completed the 6th consecutive week of new highs for the S&P500 (C Fund).  The last time we saw 6 consecutive weekly highs was late in 2017.  The market then paused for a couple of weeks before pushing MUCH higher into early 2018.  There is no way to know what will happen next for this market BUT, this week was significant as it gave us a new floor vs a ceiling…  For the week the C fund was up 0.89%, S fund up 0.66%, and I fund down 0.09%.  

Floor vs Ceiling

The 3 year weekly chart of the C fund below shows a clear breakout thru the upper channel line.  This channel line, that had been acting as a Ceiling for almost 2 years, is now our Floor.  This has DRAMATICALLY reduced market risk and increased the odds that the market moves higher from here.  In the short run, a weekly close below 3050 would put us back in the consolidation pattern and represent a potential serious threat to the rally…   

Short Term

The C fund is approaching the upper channel line in its 1 year daily chart.  We could definitely see some resistance as the price bumps up agains this line.  We will need a solid breakout above 3150 to get out of this channel pattern to the upside.

The S fund broke out of a horizontal consolidation pattern on Friday.  The S fund has been in a very narrow price range since 1 November.  Friday’s breakout is significant.  Once the S fund gets above 1475 it will be out of the 7 month consolidation and able to move much higher.

What looked like a roll-over now appears to be a quick consolidation for the I fund.  The I fund’s strong move to the upside on Friday likely ended the downward trending consolidation since 1 November.

Bottom Line: Market risk was reduced significantly with this weekly close.  The market SHOULD continue higher on a weekly basis.  A weekly close below 3050 on the C fund would be a big red flag…

Have a great week!

Jerry