Odd Scenario Ahead This Last Month of 2011By on 2011 Nov 30 Wed 19:31:43
First Time in 5 Years …
In the past 10 years, only 2001 and 2002 that ES is trading from below 200 day SMA to start the Thanksgiving rally. There is no real comparison this year how ES will react this time to the moving average that is hanging right above around mid 1260s.
Two Charts Telling the Same Tale
The more interesting thing that just happened this week, however, was how manipulated the markets really are.
Take a look at this chart starting from end of November 2010.
It took 2 weekends with 2 unfilled gaps to get S&P future to go from 1180 up to 1235. Then a week is needed to digest the gain before going higher.
Now take a look at this chart ending November 30th 2011 (Today).
What took year 2010 8 trading days to complete, now only takes 4 trading days. Same structure – start from a flush low, with 2 unfilled gaps, and 200% expansion from the prior week. Yet in year 2010, the 8 days gain was just 50 points while the one we got as of today is 80+ points.
So when people says that Christmas rally is arriving late this year, that is completely wrong. It arrived early (by a week comparing to last year) and already completed what a normal Christmas rally would have done in just 4 days.
It is obvious from the 2 charts above that the same market manipulation technique is used to force the stock market to go higher this year.
Outlook for Year End
There is a big difference between this year and last year – S&P was sitting above year 2009 close back in December 2010 while this year it is rallying towards year 2010 close from below.
Historically a rally that challenges the yearly close from below with such high speed usually results in very ugly selloff. This has not happened for many years. It was very common in the bearish years back in late 1970s to early 1980s.
For S&P to be able to rally further and taking out the year high, it has to gap above the 2010 close and consolidate above that. Otherwise, the rally is already over.
Funny how mainstream media are saying that Christmas rally has begun.