From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

• This week, our macro universe was negative, as 83% of our list closed lower with a median return of -1.66%.
• Crude Oil $CL was the winner, closing with a 4.60% gain.
• The biggest loser was Lumber $LB, with a weekly loss of -5.84%.
• There was a 2% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 2%.
• 13% of our macro list made fresh 4-week highs, and 11% made new 13-week...

From the Desk of Kimmy Sokoloff

We filled the gap down on the $SPX at 3,818 and the market continued lower.

$QQQ closed its respective gap as well.

Sector-level trends are deteriorating - every previous time this happened this year, the S&P 500 went on to make new lows. 

More Context: Our sector-level trend indicator looks at momentum, price and breadth trends across the 11 S&P 500 sectors. It captures the breadth of these trends more than the intensity (the table inside the report shows the details). The mix of trends has ebbed and flowed by indicator and by sector this year. But every previous time the composite indicator has dropped below zero since the S&P 500 peaked in January, new lows have followed. If that pattern holds, the S&P 500 could soon find itself testing its October low (which is not what many of the seasonal studies would suggest is likely right now).      

In our Market Notes, we take a Deeper Look at the price evidence arguing for & against a test of the Q4 lows and what that could mean in the context of a challenging longer-term trend environment.

The bottom line is that the bottom is in for these stocks. The evidence continues to build in the bulls’ favor.

~ @sstrazza

Starting off with fire! We're not mincing words here.

But I'm not going to steal any of Strazza's fire. Head here to read his piece on what's going on with Chinese stocks. It sets the stage beautifully for today's trade.

Caught up? Great, let's get into it.

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

We've adjusted a position in the Paid-to-Play portfolio today:

In our Dec. 5 note, Hitting Resistance, we argued the case for continued caution.

With the S&P 500 $SPX testing its channel resistance, the US Dollar Index $DXY sitting on long-term support, and the correlations to legacy markets getting tighter, there was no conviction to be had in long positions.

In recent weeks, we've seen risk-off action persist, with the S&P closing the last two weeks down more than 5%. Further, altcoins have slumped, with many taking out their November lows.

This remains an incredibly sloppy tape, where high cash positions and patience provide the trading edge.

The largest insider buy on today’s list comes in a Form 4 filing by Hill Path Capital Partners.

The hedge fund revealed a purchase in Dave & Buster's Entertainment $PLAY for roughly $12 million.

From the Desk of Kimmy Sokoloff

Let's see what this week brings.

If the $SPX can hold on to 3,800 roughly, there's potential for a back-test up to 3,940 or so.

If not, then we head down to 3,744.

This market environment is not like others that came before it.

Remember people used to complain that only 5 stocks were driving the market?

Now they complain that those 5 stocks aren't working.

But many others are.

And that's the point.

With new environments comes new leadership. We've seen this happen over many decades.

And those 5 stocks that everyone used to complain were driving the market, have now been laggards for quite some time.

I think people just like to complain.

But if you're like us, and would rather look for opportunities to profit instead of just bitching all the time, then it's important to look underneath the surface.

A great way to visualize the broader leadership vs just a few names is in the equally-weighted chart of the S&P500. This...

Fun Fact: In addition to being a Market Technician and CEO of All Star Charts, I am also a Certified Sommelier.

That's like the CMT but for wine.

And just because I own a Winery in Napa Valley and passed a few exams, people think I know everything about wine.

But that's not how it works.

Just like in markets. I've been doing this for almost 20 years. I've passed plenty of exams. But I don't know everything.

That's not what it's about.

Technical Analysis doesn't give us all the answers. But it sure goes a long way in helping us ask the right questions.

In the wine world it's the same thing.