Monday, December 16, 2013

A Tenuous Bounce...12.16.13

The majors were up in the pre market session and held on respectable gains throughout the day, bouncing off of Friday's TrendX support line and finishing the day just slightly below the TrendX zero line.
Note volatility is climbing also (XIV down = VIX up) at the same time that SPY is rising.
This unusual situation can probably be traced to the high expectations for the FED's Wednesday pronouncement on the near term prospects of the FED tapering off its current $ 85 billion/month buying program of mortgage backed securities.
Wednesday is widely expected to be a major pivot point in market momentum and will likely set the tone for at least several weeks going forward. It could provide the catylst for the 5-8% decline that many market gurus are forecasting...or it could spark a blowout Santa Claus rally to the upside.  Which ever way the markets swing it promises to be exciting.