SmarTrend Update for Nov 30
Last week was relatively quiet with early-week gains erased in Friday's short session amid concerns thousands of miles away in Dubai. Rather than take big bets either way, traders squared positions leaving the indices effectively flat for the week. On the SmarTrend front, much was going on behind the scenes. While the % of all trends that are in an Uptrend remained flat at just a hair under 60%, the number of Uptrends that are in the money fell slightly while the number of profitable Downtrends ticked higher. Further, the average performance of a Downtrend improved with the average length of a Downtrend up to 47 days. Meanwhile, the average return of an Uptrend fell to around 31% - a level not seen since June. Put together, this activity implies profit taking for winning positions and less inclination to buy dips and pick up lagging or declining stocks. Some of this action is to be expected near year-end as investors engage in tax selling strategies while some of the activity may be attributed to general skittishness fanned by fears in emerging markets. Absent the ability to gain traction and get through resistance at 1100-1110 on the S&P, more of the same may be in order. This week's employment report may be the data point that sets the tone for trading direction going into the end of the year. We will be watching the data as well as the developments abroad and report our findings each day in the Morning Call report.
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