12-18-14 Market Bias: Consider Going Long (With Caution)

This is just a quick analysis...I'm not going to go into much depth. This analysis really isn't that great.

My biggest concern is with the Christmas holiday we are not getting representative market action. I feel that if you really wanted to be safe you should stay out of the market until after Christmas. However, if you do you're likely to miss opportunity. But its better to be safe than miss opportunity some times.

The SPX gained 48 points today after being trapped in the jaws of a bear downturn. The primary stimulus was the dovish FOMC minutes where the FED left the "considerable time" phrase in and talked about patience in raising rates...this eases some of the concerns that the FED would hike rates quickly. The FED also sounded confident about the markets and that is a green light: http://www.investing.com/news/stock-market-news/u.s.-stocks-extend-rally-on-fed-assurances;-dow-soars-2.43-320862

Economic data had mostly been good the last few days, with US Jobless Claims continuing to fall.

I feel that the first signs of a change in market mood happened early morning on Tuesday 12-16-14 when oil started to rally. Although the day ended down I think that was the last hurrah of the bears on this page of the story--for now. Oil is likely to slowly decline as investor mood has somewhat shifted in my view, but it remains dangerous. If oil starts to decline vigorous we will see a halt in market advance. The price of oil has big influence in the market as can be seen from the following daily chart of Tuesday when the mood shifted. The next day oil fell but the markets decided to rally, and rally they did, up (not shown):

Global concerns remain, so the markets are by no means out of the woods yet. Here are my concerns:

• Oil--could start falling again.
• China's slowing economy.
• Europe's politics and economic growth
• Russia's declining currency.
• Japan's recession.

However, some factors to the upside are:

• Institutional buying
• Europe woes less extreme than thought
• Possible increased central bank stimulus

An upbeat federal reserve and a strengthening US Economy.

I am no expert by far. Much of my opinion is based on the $TICK which now shows solid buying which will probably last for quite a few days, driving the market up. However, the market has risen so fast...this concerns me.

I would feel much better if the market gave back some of its recent gains tomorrow. It didn't seem like this rise was supported with a lot of volume...seems to me to be due to the holidays. However, I will probably jump in tomorrow with $1000 in calls (options) and a month long outlook. I will update if my mood changes.