Unquenchable Exuberance

SPX closed above the 5 day MA yesterday and that took the number of consecutive closes above the 5 DMA to 27, which is a record as far back as my decent daily data goes back to the end of 1961. I was saying yesterday that this might be an all time record and Zero Hedge posted an article after the close yesterday confirming that, and adding that it equals a 27 day run in 1928. If we see another close above today then that would beat even that into a new SPX lifetime record.

There have been five previous runs of 20 or more closes above the 5 DMA going back to the end of 1961, and I've noted the stats on all of those for what happened after the end of the run in the short term, and also what happened over the next year. Those stats are on the chart but in summary the end led into a retracement of between 2% and 7% with the median retrace at 3.5%, and all of the previous five were up over the following twelve months, though as Tyler Durden noted, that wasn't the case in the case of the run in 1928. Even in that case however the market doubled again before it halved, so regardless history is telling us to expect more upside after some retracement. SPX daily 5 DMA chart:

The weekly upper band rose slightly more than I expected to 2079 and that is likely to be strong resistance this week. SPX weekly chart:

The daily upper band is at 2077, under the weekly upper band and now in easy range. SPX daily chart:

The CL chart is looking interesting here. Declining resistance from 93 has been pinocchioed a couple of times in recent weeks, but CL only closed above it for the first time yesterday. CL may have bottomed now but should at least be in a bottoming process. After a reversal pattern has developed I'll be looking for a move to falling megaphone resistance, currently in the 83-5 area. CL daily chart:

We may well see a hit of both the weekly and daily upper bands today and I'll be looking for resistance there. We may well then see a retracement that then breaks this amazing run of closes above the 5 DMA, which closed yesterday at 2057. This is Thanksgiving Week though and as we were seeing yesterday, it may not be possible to get a significant move down, or at all, this week.