updated: Nov 6, 2017

About this time last year, COMP was having trouble breaking out. In our October 2016 Update, with COMP at 5312, we suggested it wasn’t quite ready to do so. Speaking of the faltering, concentrated leadership…

In other words, if this very small cadre of stocks with PE ratios in nosebleed territory lose momentum, COMP will test 5132 again.

One month later, COMP tested 5132 yet again. On Nov 2, it closed below it. As the March 2000 (tech bubble) high, 5132 was critically important. A convincing breakout past 5132 would mean everything was officially awesome.

But, breakouts were hard to come by. COMP tested 5132 8-9 times between Apr and December 2015 before giving up and tumbling nearly 20% into Feb 2016.

The next successful assault came in Jul 2016, but was followed by two backtests which dipped back below 5132 in Aug and Sep. The November backtest turned into more than a backtest. COMP closed below 5132 in the course of a 9-session losing streak (-5%) that dropped it below the SMA100 as well.

Timing, as they say, is everything. Luckily for COMP, this breakdown occurred just a few days before the US election [see: Why the Trump Rally is a Fraud.] Like all other equity indices, the effects of the USDJPY and oil ramps and unprecedented VIX smackdown were immediate and are ongoing.

COMP closed back above the SMA100 the next day, and has remained above it ever since — a gain off the Nov 4 lows of about 35%. As we glide into year-end, it’s a good time to review where the index stands and what might come next.

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