November and December are usually pretty good months for the equity markets. Thanksgiving gives the market a boost, and there is normally a “Santa Claus” rally to carry into the end of the year.

But there are only 30 trading days left until 2015. What’s likely to happen in the rest of 2014?

Our best guess: nothing much.

Back in the spring, we calculated the top for this year would come in around 2020 to 2080, and we haven’t had much reason to change that target since. We are pretty much there now. There may be a little more room on the upside, but we are not expecting a screaming 200-point rally into the holiday season.

The Long-Term View

That doesn’t mean we think the bull market is over, just the opposite. In our view, the long-term uptrend is robust and will continue, but we don’t think there will be too much more this year, for a three reasons.

1) This raging bull market has been largely fuelled by the Federal Reserve and its quantitative easing. QE is officially over, so another big rally is unlikely, but the stimulative effects will linger on, so a crash is also unlikely. This suits the Fed. They want to slow the market down, not make it crash. We think they will succeed.

2) To the extent that technical analysis still works in a market so completely dominated by the Fed, our outlook is supported by two chart patterns, an Elliott Wave analysis and a long-term double top. Both give targets for the near-term top between 2030 and 2045. That’s right where we are now, and where the market is moving sideways. The SPX (the large-cap market index) keeps posting modestly higher highs, but it is mainly stalled in a consolidation range here.

3) Since it pulled back to the 1820 level a month ago, the SPX has not had a single day where it retraced even 1%. This train is only going in one direction. But eventually the buyers are going to want to take some of their profits off the table, and the longer the market goes without a retracement the more booking the gains and stepping aside will look like a winning strategy.

The Short-Term Outlook

For the short term, the SPX is in an extremely overbought condition. But the strong rally from the mid-October low of 1820.66 has scared away the sellers. The shorts have been murdered almost every day since then.

With momentum fading, the SPX went sideways for the past four days. That kind of consolidation movement – four dojis in a row on the daily chart – suggests at least a slowdown in the rally and a possible reversal.

The overbought condition must be relieved soon, but that doesn’t mean a market crash. The market can show some profit-taking behaviour, continue to go sideways between 2050-2020, or it can pull back a little further toward the 2000 level. Any of those – or some combination of them – is possible here.

In the absence of some market-shaking news – an outbreak of peace in the Ukraine, perhaps – we think the rest of the year will be a little, well, dull.

How To Trade It

If you are interested in trading this market, the vehicle we use is the S&P500 e-mini futures (ESZ4). For the early part of the week, we have resistance overhead around 2045-50, and that is a reasonable short entry for a short-term day trade.

If we break below 2026 in the regular trading session, we could see a decline to 2020-2018, and that is our tentative long entry for a short-term day trade.

Use proper stops, of course.

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