2017 market outlook

2016 is a great year for those investors who are patient, positive forward looking and staying with long term uptrend although there are definitely some setbacks and dips. How the market will perform in 2017 is every investor’s most concern with a new president who can shake the country with lots of uncertainties.  So far after the first week, sp500 made a record new high at 2282.1 with close up by 1.7%. It is an impressive price action. The statistics of the first week performance in January and the entire January has its significant meaning. But I am not going to emphasize it here. I will show some important similarities between 2012 and 2017 to help us to lay out the market road map and strategy. Sp500 monthly MACD just happened golden cross last month which is very bullish for long term. This golden cross totally negate the death cross which happen in market top of 2015. Without this negation, market runs under the negative divergence all the time, the bulls run under the shade of bear. Now the bears will run under the shade of bull unless the MACD cross down again. Does this mean the bull will sail through without any turbulence or shake? No, probably not. By checking back 2012 chart, we can easily find there are around twice 10% hair cuts during the year (European sovereign debt crisis). After 2012, the market enjoyed 3 years’ long bull cycle (everyone knows it is due to the great QE infinity) Are we getting the same market behavior in 2017? There is no crystal ball. But I think we will get 10% hair cut in 2017 once or twice. Based on seasonality: “sell in May and go away”, my strategy will still be to buy the 3%~5% dip for reversal up before May, after that, I will be more patient to buy or add more hedge for protecting long positions. I will unravel more details along the time with the market development for each major turning point. Current status of MACD is monthly golden cross, weekly golden cross, daily death cross. What does this mean? It means potential short term pull back is developing(why use term "potential"? The pull back not started yet and it may take a short while), but longer term still bullish.

http://stockcharts.com/h-sc/ui?s=%24SPX&p=M&b=5&g=0&id=p84366178501&a=497994432