The Oct' net monthly gains were very decisive for the US equity market. Regardless of any near term retrace to the 200dma (sp'2060s), the 50dma (2020s).. or even a little lower, it will do nothing to negate a huge multi-month turn back upward. New historic highs look due in some indexes before year end.
Lets take our regular look at six of the main US indexes
Having ramped 159pts (8.3%) in October, the sp' continues to make new highs. There is a viable short term peak of 2116 - a mere 18pts (0.9%) from the May historic high of 2134. Underlying MACD (blue bar histogram) cycle remains negative, but is now ticking upward. At the current rate, we'll see a bullish monthly cross at the Jan'4th 2016 open.
The tech' is comfortably back above the giant psy' level of 5K, and indeed, already above the important 10MA (4958). Even a short term retrace of 3% would do no significant damage to the giant Oct' gains. First upside target is the July high of 5231.
The mighty Dow is already within 1% of the 18000s, and new historic highs (>18351) look due within the next 2-3 months. A few daily closes in the 18400s should give clarity that the next psy' level of 20K will be hit next year.
The master index is still trading under the monthly 10MA (10670), but the 11000s do appear within range by late Dec/early January.
The second market leader is within a fraction of the 1200 threshold, and looks set to break new highs (>1296) in Q1 2016. At the current rate of recovery, the monthly MACD cycle will see a bullish cross in Feb/March.
The 'old leader' - Transports, is still struggling relative to the rest of the market, currently @ 8241. A Nov/Dec' close above the 10MA (8314) will be very important to confirm the upside seen in the rest of the market.
The US market continues to recover from the Aug' low of sp'1860. The fact we saw 2116 this past week was indeed testament to just how strong the underlying upside is.
For the hyper-bulls out there, it will be important to see ALL of the US indexes settle the year above their respective monthly 10MA. Further, a couple of new historic highs (viable in the sp'500, Dow, Nasdaq), would further support the notion of broad upside across 2016.
Best guess: sp'2116 as a short term high, with a moderate retrace to either floor around the 200dma in the sp'2060s.. or 2020s - where the 50dma will be lurking by Nov' opex.
A much quieter week is due.
M - -
T - Import/export prices, wholesale trade
W - -
T - EIA report, weekly jobs, US Treasury budget
F - PPI, retail sales, bus' invent' consumer sent'
*there are a few fed officials set to appear, notably, Bullard and Dudley on Thursday.
Back on Monday :)