We had a climax sell signal on Monday, the 3rd, with $NYUD:$NYUPV dropping to -18.43, one of the lowest oversold readings for this that I remember. Then on Wednesday we had a bottoming tail/hammer and the rest is history.
We since have added 56pts to the $SPX and closed for two days back inside the one-year trend channel. We have also cleared the previous support/resistance area of 1770. However, we are still in a confirmed A-B-C down, though not by much. The C point of that A-B-C down is the swing high of 1798.77 and that shouldn't be too hard to take out and in doing so this will negate the A-B-C down.
The width of the price channel is 120pts, with the bottom being right at 1760. This gives us a measured move to approximately 1880 or maybe 1900 depending on whether we go the direct route or via the scenic route. This move will likely take several weeks but it is possible that we could get to the upper channel line by the end of the month.
This is a pretty optimistic view because we are not out of the woods. First, we need to stay above the previous support line at 1770. Next, we need to get back above the 50MA, and finally, per my method, we need to see the 9EMA cross up through the 20MA as a fresh 'buy' sig. Along with this, I want to see the DI lines have a bullish cross sometime early next week and I want to see the RSI continue to rise. As long as all of this happens in the next week, then we should be good to go. However, we have to hold 1770 or game over.
And don't forget, we have that huge resistance zone from 1810 to 1850 to get through. There are a lot of people trapped up there. As long as the market looks strong when we enter that zone, assuming we do, then those long will breathe a sigh of relief and sit tight; however, should the markets run into a headwind in that resistance area then longs who have been holding may want to go to cash just to be safe and their selling will beget further selling and stronger resistance.
As I mentioned on my 60min SPY chart on Friday, we are very overbought short term and market will need a bit of time to catch its breath before the next leg up can start. I would guess that first we'll take out the pycho round number of 1800 before we get a pause day so look for a $SPX close on Monday somewhere just north of 1800 and then a rest day for Tuesday. This is, of course, 100% certified pure speculation as the market loves to make fools of those that dare to divine its movements and news events over the weekend could throw a monkey wrench into the works.
All IMHO & GL in the week ahead.
We since have added 56pts to the $SPX and closed for two days back inside the one-year trend channel. We have also cleared the previous support/resistance area of 1770. However, we are still in a confirmed A-B-C down, though not by much. The C point of that A-B-C down is the swing high of 1798.77 and that shouldn't be too hard to take out and in doing so this will negate the A-B-C down.
The width of the price channel is 120pts, with the bottom being right at 1760. This gives us a measured move to approximately 1880 or maybe 1900 depending on whether we go the direct route or via the scenic route. This move will likely take several weeks but it is possible that we could get to the upper channel line by the end of the month.
This is a pretty optimistic view because we are not out of the woods. First, we need to stay above the previous support line at 1770. Next, we need to get back above the 50MA, and finally, per my method, we need to see the 9EMA cross up through the 20MA as a fresh 'buy' sig. Along with this, I want to see the DI lines have a bullish cross sometime early next week and I want to see the RSI continue to rise. As long as all of this happens in the next week, then we should be good to go. However, we have to hold 1770 or game over.
And don't forget, we have that huge resistance zone from 1810 to 1850 to get through. There are a lot of people trapped up there. As long as the market looks strong when we enter that zone, assuming we do, then those long will breathe a sigh of relief and sit tight; however, should the markets run into a headwind in that resistance area then longs who have been holding may want to go to cash just to be safe and their selling will beget further selling and stronger resistance.
As I mentioned on my 60min SPY chart on Friday, we are very overbought short term and market will need a bit of time to catch its breath before the next leg up can start. I would guess that first we'll take out the pycho round number of 1800 before we get a pause day so look for a $SPX close on Monday somewhere just north of 1800 and then a rest day for Tuesday. This is, of course, 100% certified pure speculation as the market loves to make fools of those that dare to divine its movements and news events over the weekend could throw a monkey wrench into the works.
All IMHO & GL in the week ahead.