Fish or Cut Bait

Update January 10: So far, so good for the market, as it remains above its 200-day moving average. We'll see if the rally continues.

It was impressive how the markets fought its way above its moving averages and made some gains. Now it’s time for the market to show its true colors, and it may not be pretty. I think we’ve seen this scene before. Just as we think we’re going higher, the markets fall back. The culprit this week could be the news: Europe for sure, perhaps Iran, and earnings. The odds favor a pullback, but as you see on the chart below, the S&P is trending higher. We’ll see if the market is all hat and no cattle. It will be a good sign if it can remain above its 200-day moving average. Looking at the chart below, MACD has crossed over the 0 line. Technicals: Positive signals.   Fundamentals: Questionable if the rally will continue