Will The Small Caps Take The Lead?

December 8, 2019

Weekly Market Outlook

By Geoff Bysshe

After a two-day correction back to its breakout level, the IWM vaulted to new 52-week highs on the back of an employment report that surprised even the most bullish analysts.

Last week’s price action revealed some very interesting shifts in market leadership. In this week’s Market Outlook videos, I highlight the markets, sectors, and indicators to watch to confirm whether these shifts will become the new trends.

Here are some of the highlights:

• Risk Gauges turn bullish
• IWM retraced to test 160 breakout level, and then rallied back to new 52-week highs.
• SPY & QQQ rally, but don’t make new 52-week highs, despite AAPL and GOOGL having big moves.
• The biggest volume days were two down days – Monday & Tuesday.
• Big banks (XLF) and healthcare (XLV) show leadership while Semiconductors (SMH) lagged.
• Energy (OIH) looks poised to rally after 6 months of basing out.
• Copper (JJC) and the commodity ETF (DBA) are trying to break out of low bases.
• Market internals suggest that last week’s 2-day sell-off may have been enough of a rest for the market to push higher.

December has a reputation of being a bullish month, but it’s often a bumpy ride. As long as the markets stay above last week’s low the bulls should be in control.

December can also set up patterns that help define big trend trades that start in January. I covered this concept at the end of last Thursday’s training webinar about how to become a more consistently profitable discretionary trader. You can find the replay to that webinar here for a limited time.

Best wishes for your trading,

Geoff Bysshe
President
MarketGauge