Dollops of Pre-Election Resistance

 | Dec 12, 2012 | 7:30 AM EST  | Comments
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According to the Mayan calendar we only have 10 days left. Maybe that's why we haven't heard many of those December countdowns about the number of shopping days there are until Christmas -- and maybe Congress is hoping the Mayans are correct, as well, so they don't actually need to come up with a "fiscal cliff" deal.

Turning to the market, the major indices have now completed a total round trip from the days leading up to the election -- and it seems all the post-election fears are gone now, too. What struck me, as I reviewed Tuesday's charts, is that every major index is trading exactly where it had been the day before the election.

The S&P 500 is at 1428, where it closed just prior to the election. The downtrend line comes in a bit higher, closer to 1435, but it's in the neighborhood.

S&P 500

The Nasdaq -- which we reviewed last week, when I discussed the potential for a head-and-shoulders bottom to develop -- has that 3025 level to contend with. The index closed at 3022 after it had traded higher than that, so that's telling us this is an area of resistance as well.

Nasdaq

Even the Dow -- which I wrongly figured wouldn't be climbing for a fifth trading day in a row -- is right where it had been pre-election.

Dow Jones Industrial Average

The Russell 2000 has moved above its pre-election resistance. However, it has another resistance level not far overhead as it bumps into that trendline -- and as it begins to fill a gap from mid-October.

Russell 2000

So the resistance areas are all clear, but let's see what the statistics say. Breadth, for one, was good but not great. The aforementioned Russell outperformed here. On the NYSE, the number of stocks making new highs was rather pathetic: We saw 149 Dec. 3 and only 125 during Tuesday's push upward.

Number of Stocks at New Highs -- NYSE

Furthermore, what the heck happened to the banks? They were the big favorite last week, and this week they cannot get out of their own way.

On the positive side of the ledger, the cumulative-volume indicator on the Nasdaq continues to impress me. It keeps pushing higher, even though the index itself hasn't yet taken out its resistance level of 3025 and 3040, with the downtrend line around 3040.

I also like that the mid-cap stocks, which I highlighted last week, have broken out and no one seems to have noticed it. See the S&P 400 chart below.

S&P 400

Still, the market is reading as overbought, per my Oscillator, and Wednesday will bring a Federal Reserve decision to go along with the resistance zones in the indices. So I'm in the camp that says the market needs a pullback or a consolidation. My preference is for a pullback.


 

Overbought/Oversold Oscillator -- NYSE

Overbought/Oversold Oscillator -- Nasdaq

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