Stocks have been on a winning streak this quarter, with the S&P 500and Dow Jones industrial average up more than 8 and 9 percent, respectively. And master technician Ralph Acampora says that next week’s action could determine whether stocks will continue their run into the end of the year.
“I think the momentum is still there,” the well-known technical analyst said Monday on CNBC’s “Trading Nation.” “We break the November highs, hopefully in the next week or so, and I think you’ll participate in the year-end rally.”
However, Acampora, of Altaira Capital Partners, said he needs to see broader market participation, especially from the Dow Jones industrial average and the Dow Jones transportation average.
“From my vantage point, I have to see new highs … for me to be confirmed that we’re maybe out of the woods a little bit,” he said. “The market has been very, very fractured, and certain sectors and groups have done better than most. We need to see a broad-based rally and honestly I don’t have evidence of that just yet.”
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Dow transports have tumbled 10 percent this year, a wide divergence from the S&P 500 and Nasdaq composite, which are up 1.3 percent and 7.7 percent respectively. The Dow Jones industrial average is down slightly for the year.
With a Federal Reserve meeting on the horizon, Acampora said he doesn’t see the central bank derailing stocks before year-end, as the market has already priced in a December rate hike. Meanwhile, the U.S. dollar, which hit an eight-month high Monday, is primed to go even higher, he said.
“The dollar is practically back to its January 2003 levels,” he said. “From a long-term point of view if you look at a 20-year picture of the dollar, I think we’re going higher. And I think that has negative implications for commodities, especially gold.”