Ian Woodward's Investing Blog

I hope you all had a Happy Thanksgiving, and now after a Pause to Refresh we should expect to start the seasonal Santa Claus Rally.

The Market Indexes have been very strong coming out of the “V” Bottom and with 30 Trading Days of progress, we are now overdue for a correction and a Pause to refresh before we begin the Santa Claus Rally.

The Twelve Drummers Count has now reach 30 and we have not had a rally like this since January 2013, so the odds favor some form of a correction before we see the traditional Santa Claus Rally:

I have added three columns to give us more insight of how the strength moves up and down the Buckets Ladder.  I show the tally for the bottom four, middle four, and top four buckets which clearly show when the bias is up or down for an Early Warning:

To prove my point, the next chart shows that we reached a Top 4 Bucket count of 82 all of 19 trading days ago on 10/31/2014 and have slid down the count as shown:

%B for the S&P 1500 is still strong at 0.82, but we should now expect a decline based on the above:

This next chart shows the progress in the past 30 Days after reaching a bottom, and as I suggest it is now time for a correction:

Lastly, here is the chart of the Accumulation:Distribution Ratio with the NASDAQ now in Overbought Territory and expecting a correction:

Net-net, play the odds of a small correction before we start the usual Santa Claus Rally, but realize we are into New High Territory.

Best Regards,

Ian.

A Month ago we had utter turmoil in the Market and now we are into New High Territory.  Be careful as this market has Fangs!

After a “V” Bottom, this Market has been very strong and all Indexes are back into High Territory; this market can go higher but is due for a Pause:

The move this month has been remarkably strong coming off a “V” bottom, and now the rally is 16 Trading days long, so a bit long in the tooth:

In the last two years, there have been only five occasions that the rally has been higher than 16 days, so we must look for a correction soon:

If the pullback in the S&P 1500 has %B stay above 0.7, the Market will remain healthy, otherwise watch out below:

Five weeks ago we were in the depths of a 10% correction and potentially going lower, but to our amazement we pulled out with a “V” bottom:

…And a month later we are into a very Strong move with %B above 0.5 around 90% for days:

The Jobs Market Report added to the enthusiasm and kept the Market up with yet another Month of >200,000 jobs, which is encouraging:

…And here is the long term view from 2011 to now:

Enjoy and Best Regards,

Ian.