The Quick and the Dead

The stock market's rally has been a quick one, but with Tuesday action it is also DEAD! There is nothing like a convincing day of distribution to kill a rally. And Tuesday was the perfect picture of distribution with all of the major indices falling 1% or more on higher, above-average volume. Of course, the bulls are going to try and push the market higher and test the recent highs and break out anew, especially when we enter the traditionally strong January period. So expect some weakness over the next few weeks, followed by a rally into January. But I am skeptical that this rally will carry to significant new highs. So it would be prudent to do some selling soon, if not already. This is what the big boys will likely be doing in the next few weeks to lock in a solid, positive return for the year. For now, 1630 is resistance for the NDX and support is 1545. Those levels should be used to do some selling and buying, respectively.

Bonds have struggled after last week's weak employment report, but look for that to change, especially after the Fed raises rates again next week. I also suspect that, although serious, there has been too much public handwringing in the media for the USD weakness to continue unabated. I am looking for a further uptick in long rates and some firming in the Dollar. No reason to be tempted into the long end of the yield curve yet, stay short.