Stocks negatively reversed (opened higher but closed lower) from fresh record highs on the first two trading days of 2014. The market still looks very strong and a pullback of some sort would be welcomed here. The Fed will now be printing $75B each month instead of $85B, which is still very bullish for stocks. Technically, the action continues to be very bullish as the market as the benchmark S&P 500 found support and bounced perfectly off its 50 DMA line in the middle of December. As long as support holds, by definition, the bulls remain in control of this market. As we have mentioned several times this year, we are in a very strong bull market and pullbacks should be bought, not sold. In the short term, the market is clearly extended and due for a another short term shallow pullback. Meanwhile, the intermediate and long term outlook remain very bullish as the major averages and a slew of leading stocks continue to act very well.
MONDAY-WEDNESDAY’S ACTION: 2013 Goes Out With A Bang
Stocks were quiet on Monday as trading dried up ahead of the shortened holiday week. Previously owned homes sales rose less than expected in November. A slew of housing stocks soared on hopes that home prices across the country will continue to rise in 2014.
THURSDAY & FRIDAY’S ACTION: Stocks Fall in 2014
MARKET OUTLOOK: BULLS ARE IN CONTROL
As we have been saying all year, the market is very strong in all three time-frames: short, intermediate, and long. The last pullback was shallow in size (%decline) and scope (days/weeks, not months). As always, keep your losses small and never argue with the tape.