Someone noted recently that there are about 18 days left of trading in December, and therefore in the year 2020. I am certain there were times back in March when it barely seemed that we would make it to year end let alone have a market that has done as well as it has.
But that got me thinking, will folks spend the remaining weeks of the year winding down? Perhaps they don't want to press their bets? I always wonder about that at year end. For example do folks simply just check out if they have had a good year?
Monday sure felt like it. Breadth had its first negative day in a week, so that was a minor change where Nasdaq was green and breadth was red. We used to see a lot of those last summer, but not lately. If we see more of it, then it will be time to turn cautious on the market, because sentiment that is too bullish (and it is definitely too bullish) combined with poor breadth is not bullish.
As long as breadth hangs in there and continues to do well, then sentiment is something to acknowledge, but not fret too much over. One thing to note is that the DSI on Nasdaq is back to 88, so one more up day for Nasdaq and it could go over 90, which is a red zone for me.
In the meantime, Gold has had a heckuva a rally in the last week. The SPDR Gold Trust (GLD) , the exchange traded fund, is up nearly $10 since the Daily Sentiment Index (DSI) got low a week ago. And GLD finds itself at the first resistance area we looked at late last week: $175-$176.
I still like GLD here, but I think it is has a lot of resistance to eat through now. Just remember how long GLD held that $175 level before it gave way -- nearly two months -- so the thinking is that folks who bought it there are now relieved to "get out even." Come on, every one of us has gotten ourselves into a bad trade where we then prayed to the Market Gods: "Get me back to even, and I will never trade that stock again!" That's why support and resistance works.
I think with some backing and filling, GLD will eat through that resistance; it's just that the path is not as clear as it was a week ago. There is some wood to be chopped to clear the path.
I was asked to update my view on the bitcoin exchange-traded fund, Grayscale Bitcoin Trust, (GBTC) so let me remind you when last we checked in, it had reached my measured target.
It had that one-day gap down followed by a gap up, but it is stalled up here. I would need a new pattern to set up, before I felt I had another view on a trade. It could just as easily go sideways from here to digest the run than anything else. I will monitor it and report if that changes.