Watch out for a December dip

Last week we looked at the potential for a further rise in December.
Markets have indeed pushed higher and the Nasdaq is now comfortably above 4000, but my indicators are starting to ooze warning signs for the S&P 500.
Here is the current chart (click for larger image):

S&P 500

The S&P has been grinding up to new highs, but is stuck in a rising wedge that will be resolved one way or the other within weeks.
We see a bearish divergence in the Earl indicator, while the slower Earl2 already peaked out several weeks ago and shows no signs of turning up. This is a technical picture that asks for extra caution.
The lunar green period is set to end later this week, so the upcoming lunar red period could easily trigger a dip back to the 1700-1760 area.
December may not offer the clear sailing that a lot of market analysts seem to expect.

My LT wave chart paints a similar picture. The LT wave chart for November did well again. It correctly indicated the upward bias for most of the month and the expected brief period of weakness around the 19th panned out too.

Here is the LT wave chart for December (click for larger image):

LT wave

The cycles suggest that the positive bias in stocks markets can extend until December 9th, and should be followed by a period of weakness until approximately December 21st. The final week of the month looks positive again.

Good luck,


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By Dan

Author of LunaticTrader and Reversal Levels method. Stock market forecasts based on proprietary indicators, seasonal patterns and moon cycles.

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