Santa On Cruise Control

The tape is now officially set to Santa Rally cruise control – as expected and predicted for several weeks now.

A few charts which I think tell us all we need to know:

My stacked SPX Bollinger chart is not looking good for the shorts. We basically are tracing both upper 100 day and 25 day borders now – comfortably inside on a steep trajectory. Yes, there will be the occasional surprise drop just to shake out a few nervous piggies. This situation can persist almost into perpetuity and top calling, especially in mid/late December, is an exercise in futility. Let it paint a top and then we talk. Or let it push outside both BBs – but that would require quite a blast higher, which we probably won’t get in the final weeks of this month. Either way – no champagne for the bears this New Year’s Eve.

Remember this TNX chart? I posted it a few weeks ago when it was around 2.8% and the stochastic was in the process of pushing above the 20% mark. I expected to see 3.4% then and we are almost there. But based on what I’m seeing here we could easily push to 3.8% or even 4% before we see a correction.

The AUD/JPY has become embedded above the 80% mark on my stochastic. NOT a good situation for the bears as this type of situation can sustain itself for quite a while. Obviously the ES futures (in blue) are along for the ride which ties in nicely into that very first SPX Bollinger chart I posted.

Bottom Line:

I told you guys we’re going to get a nice Santa Rally and here we are – no surprises for us stainless steel rats. Although we are floating higher amidst extremely overbought conditions on all time frames I don’t expect any significant changes until after the holidays. We may see a fast drop taking us down 20 or 30 handles on the SPX and one seems to be in the process of unfolding as I’m typing this. But make no mistake, there is a lot of POMO buffer cash available to paint floors and to give dip buyers an opportunity to manhandle the pigs.

Just like your grandma’s Christmas cookies a nice 2010 close around the highs is most likely baked in. Any real fun for the bears (if ever) will have to wait until 2011.

Cheers,

Mole