Critical Juncture

Critical Juncture - December 14, 2016
The Federal Reserve raised interest rates a quarter of a point today and the markets were down, but it could have been a lot worse.  With indications that they could raise rates faster than most were expecting, the market could have really been hit.  The DJIA gave up 118.
The market is at a critical juncture as measured by the Summation Index.  The Summation Index measures liquidity in the markets by tracking the number of advances vs. declines.  If you look at the Summation Index currently, it is approaching the 1000 level.  If it can't get through the 1000 level and starts to fall from here, the markets could suffer some tougher times.  If you study the Summation Index, the best performance in the markets occurs when the Summation is above 1000.  Between 0 and 1000, the markets are more neutral and below 0 there are declining markets. There are just 11 trading days left in 2016.  Many may want to carry gains into the new year and possibly pay lower taxes.  That might keep the markets from a substantial pullback until January.   The key is to watch those critical levels on the Summation Index.