Pre-Market Brief

Good morning. Futures are moderately higher (again), sp is +4pts, we're set to open around 1450/51. The dollar is still weak, with the Euro naturally higher. The near term trend equity remains up, with empty air to the mid-Sept' high of 1474.


sp'60min

sp'daily5

Summary

Another day closer to Christmas, and the volume..as low as it is, means those algo-bots can easily melt this market higher - unless a surprise news story upsets Mr Market.

Lets see if any definitive news on a fiscal cliff agreement appears today.

The clock IS still ticking, and from what I gather, it all needs to be wrapped up by tomorrow, or certainly by Friday.

*Gold bugs are going to be annoyed again, Gold is already -$6, and thats with a weak dollar! If the dollar does 'somehow' turn back upward, then the metals will come under even further pressure. 

A scary index for the doomer bears

The transportation index - the 'old leader', saw a daily close +1.6%, and that now makes for a weekly gain of 2.4%. We are fast approaching the 5400 level - the March highs. A few consecutive daily closes in the 5400s would be extremely bullish for the broader market into early January.


Trans, weekly

Trans, monthly

Trans, monthly2, rainbow

Summary

Just yesterday in the early part of the afternoon, the tranny was sporting a fifth spiky candle on the daily chart, but with the closing hour ramp, the tranny closed at the high of the day, and today's follow through was strong confirmation of underlying strength.


Breaking to the upside?

The big monthly transports chart is something I have been highlighting since I started this little blog in the early spring. We've been stuck in an extraordinary tight trading range ALL year, but once again we're on the edge of an important monthly breakout.

As I have kept noting, a close >5400 is bullish, whilst the bears should be seeking <4800. Today's close is a mere 1.5% away from breaking the bullish threshold. For the doomer bears, the transports had better reverse...soon.
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A few bonus charts

USD, daily

USD, monthly2, rainbow

Ignore the count on the daily chart, regardless of how anyone might like to count the current waves, the dollar is clearly on the slide. It looks much more serious though from the monthly perspective, where we have an initial break of rising channel support.

A December close <80 would be a real warning that the slow - but gradual, up trend from April 2011 is over. Considering the US Federal Reserve will start 45bn of 'unsterilised' t-bond buying in January, you'd have to think this initial sign of dollar weakness will see follow through in early 2013.

For those seeking major equity declines, a new wave lower in the USD is going to really pose a problem. As many are increasingly noting, 2013 might be the year when 'currency wars' really start to intensify.
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One last chart to close the day.

sp'monthly3, rainbow

We now have an outright bullish green candle, and again, its notable that we've not had a monthly closing red candle since September 2011. Considering the price action of the last two days, even a blue candle to close the year would seem overly hopeful.

Goodnight from London

Daily Index Cycle update

The main indexes closed broadly higher, with gains between 0.9-1.6%. The transports - the old leader, saw a major breakout, and is now starkly bullish. There is now empty air of around 2% on most indexes until the mid-September FOMC highs are challenged.


IWM, daily

Dow

Sp'daily5

Trans

Summary

It has to be said, today was a devastating blow to anyone holding a near term bearish outlook. The break over last Wednesdays FOMC highs was very decisive, and even the closing hour was once again something of a mini-ramp.

We can be clear on one thing..there is NO sign of a turn lower, or any levelling phase.

I won't be able to take any future index declines seriously until we take out the recent sp'1413 low, with a VIX >17.50.

On the flip side, a few daily closes >1474, and we really will be trading in the twilight zone once again.  All those crazy bull maniacs who were touting sp'1500s by year end, are now a mere 4% away!

A little more later