The end of the year and the first week of the new year are usually very good for equity market. Nevertheless, there are some exception such as in 2008.

Looking at the chart of the Sigma Whole Market Index, the chart remains well oriented. The last upleg is rather vertical and unsustainable on a medium term basis, but we could climb a little bite more in order to reach the next resistance.

The negative divergence between the Sigma Smart Money Index and the Sigma Whole Market Index remains in place at this stage. The SSMI wasn't able to print new high.

Looking at our indicators, the Sigma Trend Index remains above the key '34' level for the 3rd consecutive session. This is quiet unusual but thanks to seasonality, this could last one more week (at best).

The ST model computed new stop levels on both the NDX and the SPX:

Short Term Trading Book:

- SPX: long at 1787.18 (stop @ 1764, 3pts below the ST model to take into account bid/ask spread)

- NDX: long at 3475.53 (stop @ 3397, 5pts below the ST model to take into account bid/ask spread)

- CAC: long at 4115.38 (stop @ 4073, 5pts below the ST model to take into account bid/ask spread)

- DAX: long at 9164.04 (stop @ 8958, 10pts below the ST model to take into account bid/ask spread)

- EStoxx: long at 2974.13 (stop @ 2918, 5pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

Out of model position: (in case of a blow off rally like in 2000)

- 1 call NDX January 2014 strike 3700 @ 5.06

I wish you a wonderful Christmas eve, enjoy these moments with your family.

We are close to the next resistance (~1%). The momentum remains elevated, and last upleg looks like a 5 waves advance, we just need a surge in bull sentiment in order to confirm a major top is close.

We can notice that the STI trend index is at '54' . So, a fresh sell signal could be generated in the next 3 sessions if we get a Swing or a Power Level (PL) at or below '2'. The Swing was at '4' on Monday, telling us the rally was strong and impulsive.

The ST model computed new stop levels on all our positions:

Short Term Trading Book:

- SPX: long at 1787.18 (stop @ 1758, 3pts below the ST model to take into account bid/ask spread)

- NDX: long at 3475.53 (stop @ 3392, 5pts below the ST model to take into account bid/ask spread)

- CAC: long at 4115.38 (stop @ 4067, 5pts below the ST model to take into account bid/ask spread)

- DAX: long at 9164.04 (stop @ 8958, 10pts below the ST model to take into account bid/ask spread)

- EStoxx: long at 2974.13 (stop @ 2916, 5pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

Out of model position: (in case of a blow off rally like in 2000)

- 1 call NDX January 2014 strike 3700 @ 5.06

Looking at the chart of the Sigma Whole Market Index, it is very clear we are ready to break previous highs (very bad if we can't due to a triple top situation !!!!!! ). If the market is able to clean this resistance, we will be (again) in uncharted territory and euphoria can easily materialize in this area.

The situation in Europe is also very positive with fresh bullish gaps on all indexes. The DAX and the Eurostoxx are more advance than the CAC40, and we would not be surprised to see new 52weeks highs on those 2 indexes. Nevertheless, a 'fresh down gap' would cancel this bullish scenario.

There is no new information coming from our indicators for today:

The ST model computed new stop levels for the DAX, CAC and Eurostoxx:

Short Term Trading Book:

- SPX: long at 1787.18 (stop @ 1748, 3pts below the ST model to take into account bid/ask spread)

- NDX: long at 3475.53 (stop @ 3372, 5pts below the ST model to take into account bid/ask spread)

- CAC: long at 4115.38 (stop @ 4055, 5pts below the ST model to take into account bid/ask spread)

- DAX: long at 9164.04 (stop @ 8890, 10pts below the ST model to take into account bid/ask spread)

- EStoxx: long at 2974.13 (stop @ 2900, 5pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

Out of model position: (in case of a blow off rally like in 2000)

- 1 call NDX January 2014 strike 3700 @ 5.06

The Sigma Whole Market Index slightly pulled back after the strong impulse day we had on Monday. The market remains above the top of the red uptrend . There is nothing special at this stage.

Once again, the catalyst for the next move will be a political event: Fed's decision related to "taper or not taper". I've to admit the market acts more and more like a communist central plan rather than a free market: I mean the biggest drivers of the market in recent years had been: Merkel, Draghi, Bernanke, Boehner.... and not earnings, growth, valuation, free cash flow, ... After the "new economy" in 1998-2000 we have "the subsidised" economy in 2012-2013...

Nevertheless, it remains one warning signal in place: the Sigma Smart Money Index continues to decline, and it didn't bounce back on Monday (as can be seen on the chart).

There is no change in our indicators. The Trend Level (TL) pulled back from '3' to '2'. (neutral to negative)

Short Term Trading Book:

- SPX: long at 1787.18 (stop @ 1739, 3pts below the ST model to take into account bid/ask spread)

- NDX: long at 3475.53 (stop @ 3367, 5pts below the ST model to take into account bid/ask spread)

- CAC: long at 4115.38 (stop @ 4032, 5pts below the ST model to take into account bid/ask spread)

- DAX: long at 9164.04 (stop @ 8808, 10pts below the ST model to take into account bid/ask spread)

- EStoxx: long at 2974.13 (stop @ 2856, 5pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

Out of model position: (hedge against a blow off rally like in 2000)

- 1 call NDX January 2014 strike 3700 @ 5.06

The Sigma Whole Market Index enjoyed a low vlolatility day on Friday. The index remains below a strong resistance (top of the uptrend channel) and the next support is well below current level. The market is in danger at this time.

Looking at the CAC40, the index closed the gap and is now on a strong support. If this support can't resist, the next support is around 3940 (~ 3% below Friday's close).

The Eurostoxx recently broke its first support and the next one is well below current levels (~ 2%). This index is facing the risk of a downside acceleration.

The Sigma Smart Money Index (SSMI) continues to decline and a clear downtrend channel is now in place. Once again, the negative divergence between the SSMI and the SWMI was a key warning signal for investors.

Looking at other indicators, the trend Level is at '1' so there is no doubt that the market is (short term) oversold.

The ST model computed new stop levels for the SPX, the CAC and the Eurostoxx:

Short Term Trading Book:

- SPX: short at 1792.26 (stop @ 1824, 3pts above the ST model to take into account bid/ask spread)

- NDX: stopped

- CAC: short at 4272.14 (stop @ 4297, 5pts above the ST model to take into account bid/ask spread)

- DAX: stopped

- EStoxx: short at 3027.17 (stop @ 3038, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

Out of model position: (hedge against a blow off rally like in 2000)

- 1 call NDX January 2014 strike 3700 @ 5.06