As of this posting, we don't know who the elected U.S. President is. Even if a winner is declared, it is most likely going to be contested.
This week there are many variables a. One important variable is the consolidation that price is making in a triangle .
We are currently at the top portion of the triangle so price is in a critical spot. If price breaks out, we could easily get to and exceed all time highs.
If price is rejected then you will see price pay a visit to the last broken area. This breakout area was heavy resistance and was never retested. Price WILL come back to this point at some time...when is anyone's guess. Price can take days, weeks, months or years to retest that area.
My guess is that the retest will be sooner than later.
I indicated three setups:
- Trade Setup 1 (long): The easiest would be a break above the triangle because it's cleaner and easier to play.
- Trade Setup 2 (short): A rejection of the top of the triangle .
- Trade Setup 3a (long): A bounce off of the broken resistance. This would satisfy the retest. However, if it does bounce this is not a preferred trade for me because of the overhead resistance. Price would have a lot of work to do to breakout above this area.
- Trade Setup 3b (short): This is a continuation of trade setup 2. If the breakout area fails, then price will continue most likely to the bottom of the consolidation triangle .
Note: The consolidation between the triangle is energy and a lot is building up. Once the energy is released either in the northern or southern direction, there will be a big move. This is just for awareness in case that even happens during this week.
Good luck and be careful.
Remember: When it feels really right, it's probably wrong. And when it feels really wrong, it's probably right.
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I had the direction correct on my chart, but I guess I needed to put the title of my chart higher...lol. Price is pumping into my header. lol
Caution here. Generally if price makes a higher high, that would be a long entry. However, with the big rejection/reversal, I'm not certain it's the same trade setup #1 anymore.
I am looking more for trade setup 2 or I may just sit it out until there is additional clarity.
So far trade setup 1 is on time and on the spot.
I will be holding this trade longer. I have my SL at break even still. Not ready to take profits. I want to push this trade more.
However, we don't really have a lot of bad news going on (nothing that we don't already know about heading into next week). Even if we get more lockdowns or election uncertainty, I think the market has priced it in. Also, the economy has adapted to COVID so even if we go into a big lockdown, it won't have the same consequences as back in Feb.
I try not to hold a bias but I feel like we are going to be breaking all time highs and be up for the year by Dec 31st.
If we close above 3575 today, we can probably see another week or two of price rallies.
Elliott wave, scarily enough, struck again, right on the nose. 358.1222 was the Elliott target, and SPY closed at 358.1 to the penny! That's two key price targets Elliott wave called in one week! 381.81 would fully complete the pattern. So, you are very right, new highs are likely on the way. Maybe this week, maybe in December.
That SP500 Friday close at a new All Time High closing price in the last 30 seconds kept me thinking. This could've been a giant big bear trap all along. All the negative Covid headlines may be enticing more bears. Despite the messy 4 or 5 gaps in the chart below created last week and today, the Daily chart pattern formed a Bull Flag with today's move up, and it's a very big Bull Flag. Despite the fact Election Year seasonality indicates a November 16 drop, and so far the patterns have lined for an election year, this year is anything but normal.
How do you kill a bull market? When everyone turns bullish. How do you make everyone bullish? 2 ways...close the highly watched February gap in the VIX chart, giving traders the "all clear" signal that VIX has "calmed down" and equities are no longer risky, and turn every last bear into a bull. It's likely a LOT of people shorted the market this week. Few people expected an ATH close at the last 30 seconds of Friday. If they really wanted to squeeze every short, now is the time to do it.
The bigger thesis for SPY 381.81 lies in Elliott Wave theory. I've been following a trader who simplifies the market with Elliott Wave (youtube Elliot Wave Options) and he has called 2 numbers on SPY flawlessly to the penny this week. First, he called SPY 364, which is the exact target we hit on Monday's opening high. Then he called SPY 358.1, which is the exact number SPY closed at on Friday. All along though, his Elliott Wave pattern kept pointing to SPY 381.81. I believe all the above makes for a very compelling case to get there in a hurry and fake out a LOT of people. They want maximum liquidity in the market--they need the people who are still on the sidelines to jump into the market, and they can do that by closing the VIX gap so it's "safe" to jump in, and by smashing a new high right after having created one. Mega FOMO, parabolic moves, then take everyone's money. I think it make a strong argument for bulls.
A blow off top would send us into a new channel with unknown levels.