Thursday December 18th – The Elephant in the Room
The SPX and The NASDAQ lost the 50sma, and THAT is the elephant in the room, so we will discuss that. Today we have DATA that could move the markets UP or DOWN.
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THE SPX lost the 50sma, and I did already explain that even though we don’t like to see that, it isn’t necessarily bearish. We HAVE seen that before, and I have pointed that out. One reason that we don’t like to see it is because many will use that as a ‘stop’ if they bought the lows, so some may be on the sidelines.
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So let me discuss this loss of the 50sma again:
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THE SPX put in an ICL in August 2024 and as you can see, it rallied above the 50sma, and then lost it again. What happened next? It was under the 50sma for 4 days and then it rallied. This is simply to show you that we CAN lose the 50sma and it does not mean that we don’t have an ICL.
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THE NASDAQ lost the 50sma too, but when it lost it in 2024, it was much worse. It sold off for days under that 50sma, but it was a half cycle low and then a rally took place. So I wanted to show this because this choppiness and selling makes day to day market action frustrating, but if we have an ICL, that low should not be taken out. I DO HAVE A CONCERN THOUGH…
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I DO HAVE A CONCERN THOUGH, SO LET ME EXPLAIN. Most people know that there are a few big companies that are driving the markets higher, and I am seeing weakness in some of those. I’ll just take a quick glance and then move on. It is a cautionary note, but it can change again over time…
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AAPL – Do you remember when I called it a lagger and it broke from the base as a ‘BUY & HOLD’? Buy that dip at support and then…
Buy that dip at support and then I posted this as a buy opportunity. Well…
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AAPL looks great catching up to the other leaders, and…
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And Alphabet (Google) GOOG also ran strong out of that April ICL and remains healthy looking too, but what concerns me a bit is…
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Some of those other ‘Leaders’ like NFLX are now bearish. NFLX actually peaked in July and now we have tht bearish cross of the 50sma below the 200sma. Along with Netflix is…
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NVDA – This was very strong, ramping straight up in October, but now it looks weaker. I can see a H&S pattern if I want to, but it may just be choppiness. My point is this: When I start to see weakness in leaders, I want to keep an eye on everything until the SPX and NASDAQ get back above the 50sma.
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Yesterday I said that I go back and look at some of my favorites from my watchlist and some rallied very strongly at the ICL. Take a look at RKLB for example:
RKLB actually ran strongly out of that dcl (off of the 200sma) and had almost doubled, it was up about 80%. It has now pulled back 50% of that move. It reversed at the 20 ema. I also looked at PLTR, LMND, and a few others and they look good too.
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I looked at my watchlist of favorites like XMTR, RKLB, PLTR, LMND, TSEM, MU, AAOI, and a few others and they look good too. It is possible that the ‘Leaders’ need a rest and the small caps leaders will gather some buying and gain momentum. At this point, I am watching for signs in the markets for a rally continuation or not, but a move out of an ICL is usually strong for at least 2 daily cycles, so we should go into 2026 without taking out the lows.
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YESTERDAY:
Oil is on day 40, so a low could develop at any point, OR, it could drop for 10 or so more days. A lot of damage could come from a 10-15 day drop, since that would be 2 or 3 more weeks, so we’ll just have to see how this plays out.
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WTIC – Oil reversed and tried to regain that breakdown. Could we get a day 40dcl? Yes, so we may see Oil bounce or chop higher for a while again.
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THE USD also reversed and it may be in the timing for a dcl, but if we continue to get rate cuts in 2026, the USD may just bounce and continue lower.
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GOLD looks healthy. I would have expected it to break & run with Silver, but it hasn’t, so it may consolidate like it did in 2024. That builds up steam or energy for another run to new all-time highs. Gold looks bullish.
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I can’t believe how beautifully Silver is running , and yet Silver stocks are languishing, meandering around. If you bought Silver, SLV, or AGQ (or calls), you have done very well. LOOK at this vertical run! Are Silver stocks doing that?
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SILJ looks great by itself, but not when compared to Silver. Look at Silvers cup & ramp up, and then Silver stock cups and no ramp up. That is NOT a vertical run similar to Silver. 🙁 AG, EXK, CDE, FSM and others are just not finding the buyers that Silver has, and it does concern me a bit.
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AGAIN:
SILVER HAS A CUP & RAMPED STRAIGHT UP
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FSM, EXK, AG, etc have cups, but no vertical run. It’s a bit of a bummer. The set up is bullish and the pattern looks very good, but with Silver ramping up they really should be running.
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GDX looks bullish too. Was day 29 a dcl? Possibly. I usually use Gold for the cycle counts and it also may have a dcl at that point, but it is looking more like a consolidation too, and not a ramp up higher.
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I said:
Another way to look at this could be that is runs straight up for several days (green line) and then consolidates sideways for over a week. I do see that repeatedly. Once it breaks to new highs, it could then rally in a stronger manner, like we saw on the left side July-October.
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So we’ll see what that 8:30 a.m. ET data can do for the markets. It could just push the markets back above the 50sma as a shake out, or we could drop further, but we did see this price action in August 2024 and eventually it did correct itself and ran higher again. If you got stopped out of position, it could pay off to just sit on the sidelines and wait for a directional move higher. I would normally be buying the dip to the 50sma if it reversed higher as support, but since it broke down, it is ok to be in cash. You can wait for the markets to regain the 50sma (or if the stocks that you bought near the lows remain bullish, like RKLB, XMTR, etc) you can continue to ride those out). Again, the DATA may help push the markets higher (or not). Enjoy your Thursday trading!
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~ALEX
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BITCOIN has chopped along the lows for now, and using a 60 day daily cycle count, we would be about half-way through that move. So far, it has been weak.
