Here is the Weekend look at the NAS for Dec 13-17. Last week the support held the 55sma and bounce off the neutral. Price managed to break above the 16000-16285 resistance zone (see last week's post) and after a brief pullback into the downward trend line (identified in the midweek updates) the NAS is trading above the resistance zone again on Sunday night.
This week I will be watching for price to break through the red box into the completion zone of the harmonic I have drawn. I would expect some resistance at the green box as the harmonic is bearish. The key market driver this week will be the FED meeting. If you look back at recent FED meetings there is often a run up into the meeting and then a sell off just before or on the day of. Of course there is no guarantee. There is just what has happened before and probabilities. We have to trade what we see. If price fails to break through the red box look for a pull back to the tan box.
Although we are used to the broader indexes pulling back and then going on to make new highs effortlessly we should be prepared for some sideways to down price movement in the coming months. The new FED tapering narrative does not favour stocks and much depends on how the bond market reacts. If yields remain subdued I would expect a continuation of the rally in growth stocks. If the yield starts to move higher again I would expect growth to roll over once more and money move into financials. The most watch stock is likely to be AAPL. Many expect a continuation higher after the strong move last week. Obviously AAPL has the power to move the NAS all by it self so keep an eye on it as it may become the first 3 trillion dollar company this week.
Please like my post if you find it helpful.
Week ahead...
Tuesday... PPI
Wednesday...Retail Sales & FOMC Rate decision
Thursday... Jobless claims
Bull notes...
Price is in the bull zone.
VIX back to 18
Santa Rally
Growth stocks perking up
New leadership may emerge
Bearish notes...
FOMC surprise
Very few stocks leading current rally.
Taper tantrum
Comment:
FOMC jitters starting early with a pull back today. The 16100 zone has been a key area of support. If price fails there and cannot hold the top of the neutral a trip to the bottom of the neutral is likely.
Comment:
Could not hold the 16100 are and fell below the top of the neutral. Price quickly moving to the bottom of the neutral. Price needs to hold the bottom of the neutral or the NAS is back at the 55sma. Expect emotional price action. Levels will not be respected.
Comment:
FYI the 55sma is now 15700ish
Comment:
As you can see when price lost the bottom of the neutral after a brief bounce it fell directly to the 55 Daily SMA. Note the second bounce off the 55 was higher because the 55 had tracked higher. This is important to note because it tells us the market is respecting that line. Going forward the NAS has now formed a symmetrical triangle. Bulls want price to breakout out above it and the bears want the opposite. The red zone is still in play as resistance. If we break above the red box the upside target remains the completion zone of the harmonic identified in the opening post.
Comment:
Wow really whipsawing everyone. If you zoom out however you can see be are now building this ascending triangle on top of the neutral. Bulls need the lower trendline to hold. The bears want the lower trend line and the 55 dsma to break to the down side. Feels bearish right now with the big reversal but we will see. Hard to play anything inside the triangle so best to wait for a break. Any break should be confirmed with a re-test of the breakout area before entry.
