Yes, the S&P 500 ($INX) has posted bearish reversal pattern two out of the last three months. No, that does not mean I want to clean house and sell all stocks in the index. A look back shows the $INX post a major (long-term) bearish key reversal during September before screaming to a new high of 4,608.08 in October. As November unfolded the $INX climbed to another new all-time high of 4,743.83 before a round of holiday season selling dropped it to a close of 4,567.00, down 38.38 for the month. Could the $INX move lower during December? Absolutely. But I’m not going to get overly concerned until it posts a new 4-month low, in this case below the October mark of 4,278.94. For the record, note this meant September saw a bearish key reversal posted, October a bullish outside month, and November a bearish spike reversal.
Theoretical Position: If pulling some money out of stocks for the holiday season, one could look at giving themself a year-end gift by buying into commodities with bullish long-term fundamentals. When these markets signal the time is right. I like commodities long-term, particularly if the major trend of the US dollar index is turning down.
