Last week’s powerful breadth thrust found its equilibrium. The NYSE Advance-Decline Line held steady, finishing the week flat but maintaining its reclaimed uptrend. The stabilization after a surge could be a constructive sign: the troops have advanced, secured ground, and are holding it, suggests Buff Dormeier, chief technical analyst at Kingsview Partners.
Capital flows have reflected a restrained but steady advance. Overall flows were average last week, though the composition leaned constructive: inflows were above average, outflows ran slightly below trend, as 60% of capital movement favored inflows.
Despite the quiet trading, the deeper indicators showed subtle strengthening. The accumulated trends of both capital-weighted volume and capital-weighted dollar volume have fish-hooked upward, reasserting their positive direction. Both remain comfortably above long-term moving averages, though still slightly lagging the sharp advances seen over the prior two weeks. Liquidity is present, but by no means surging.
Meanwhile, the S&P 500 Index (^SPX) remains above its 10-week moving average, holding the higher ground reclaimed during the Thanksgiving counteroffensive. The index is edging toward the seasonal period where historically the market has tended to receive “Santa Claus orders,” a final bullish push of the year.
Whether the long-awaited Santa Claus Rally arrives will depend on three fronts:
- The generals’ ability to clear their next resistance band
- The troops following through on new-high attempts
- Capital flows continuing their upward hook.
But through it all, one principle remains unchanged: disciplined risk management. The gravestone of Halloween and the gratitude of Thanksgiving have passed. In anticipation, the markets await this season’s holiday message, whether delivered by Santa or the Grinch.
