Moving up!

A huge increase in the US deficit was reported this morning which put a dent in the bullishness for most of the day. The RUT didn't care much and reached a new high today, however! The NDX was the weakest, but still up.

I thought about putting a RUT bear call spread on today, but refrained and will likely do it tomorrow on any early follow thru strength. The RUT registered a bearish cluster on the MarketForecast indicator, which usually means that the uptrend will slow for a bit. Its RSI is also in the overbought area, for a second time.

Looking back over the last 5 years on the RUT, the RSI overbought has led to downside in the RUT index many times - see graphs below.

 

But, there was one more complex move that did not work as expected. Back in 2012, after a 10% loss over two months, the RUT bolted higher and kept going as the RSI actually left the overbought area. It wasn't until the RSI entered the overbought area a couple more times, did the pullback finally come. I am cautious during this generally bullish period, as we may see similar action again. 

The SKEW rose above 130 today - a mark it has not seen in a long time. This can be a predictor of more volatility in the days ahead. Short term volatility is below 11 again.

December looks to be an interesting month. It will be a difficult to follow-thru to the upside after such an amazing November. It will be equally difficult to start an sort of a meaningful downtrend. This looks like a good time for Iron Condors.