About this time last year, COMP had been 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.

continued for members…

First, the big picture shows that, after failing to follow through on the completed H&S Pattern that would have seen it backtest the purple midline, COMP has broken out of the top of the rising red wedge.

This is comparable to virtually all the other equity indices we watch.  It wasn’t enough to push higher within existing patterns that were already rising rapidly.  It broke out of those and has established an even steeper trajectory.

At this point, it’s pushing into the top quadrant of the rising white channel where it will soon reach the top of the rising purple channel — currently at 7260.  It probably won’t stop there, though, as the 1.618 and the rising white channel intersect at 7619.37 at the end of the year.  It’s too convenient a target to ignore.  And, I fully expect it to reach it unless we get a nasty surprise on the geopolitical front.

There’s even a channel within the channel that could help guide it to 7619.If worse comes to worse, there is decent support not far away:

• bottom of the red channel, currently at 6530
• the SMA100 at 6400
• the SMA200 at 6170
• the 1.272 at 6227
• the white midline at 5785.

I don’t think it’ll come to it, but the SMA200 is about to cross the red wedge top at 6227.06.  If, for some reason, stocks started selling off and COMP reversed here, that would make for a nice 8% short.  I would only attempt it if COMP fell below its SMA10 (currently 6682.93) and kept going.

The way things have been going, it would probably take all-out war somewhere in the Middle East or the Korean Peninsula to kick things off.

GLTA.