Simpler Sentiment – Weekly Wrap-Up 12/16/16

After putting in more record all-time highs early in the week, equites are selling off slightly and are now mostly down for the week.

The S&P 500 (SPX) is off 6 points to 2255 after hitting 2277 on Tuesday. The Nasdaq 100 gives up 23 points today to 4909 after hitting 4960. While the Russell 2000, which has been outpacing since the election, is up 2 points on the day, but off the high of 1392 from a week ago.

The VIX is down very slightly to 12.66, about a point higher than a week ago. And the VXST, the 9-Day Volatility Index, sits at 11.47 currently. This all comes with the short term actual volatility of the SPX below 10 percent.

Our Trader Sentiment Reading was at a Neutral reading at the start of the week, and given that we are less than a point off the open for the week, we will call that a good reading. Heading into next week our traders have some reservations, especially in light of the stall this week.

John: The obvious move after the interest rate hike was US Dollar higher. But what about stocks? Stocks shook off any nervousness after about an hour of trade, and are back on the path of least resistance, which is higher.

Chris: I think next week will be flat to up. The week after Christmas is going to be “nasty”.

Carolyn: I have to say I am Neutral. With time and price resistance to the rally, I don’t feel right having anyone buy at new highs. Even though I’m a cautious bull, I think putting out a “buy” could get traders in trouble!

Tucker: It appears that nothing can knock the runaway train off the tracks right now – not even an interest rate hike, or adjusting the forecast for the number of increases up to three in 2017.

Neil: Highs on selling this week. With this I am bearish for next week. This week we saw higher highs with a weaker close. Price proceeded higher without being able to bring value/ acceptance along for the ride. This tells me to be cautious of existing longs against the recent swing low of 2243 ESH7 for a likely breach next week and retracement back to the 2200 area.

Doc: Stepping in front of a freight train does not usually end well – same for the Trump Train. Year ending evening up / profit taking could provide a pullback to get on the uptrend for 2017.

David: Overall, the bullish advance since February continues to appear incomplete. Even on a short-term basis, patterns suggest that the S&P 500 is still heading up and it will likely be back above Tuesday’s highs soon. But even if a bigger pullback were to come sooner rather than later (and it will come at some point), the November low should hold.

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.