SPX had a LH and LL that in itself is negative for markets for tomorrow. SPX opened lower with a gap of 4 points at 1209 made a early morning low of 1205 rallied up to 1210 by 7 a.m. What happened needs to be understood. The floor guys were not interested in accumulating even though the price was 8 points lower from yesterday's close. Whatever they had to buy it was quickly distributed and further shorts were put in by 7 a.m. Had they wanted to go long we would have seen the 1213 taken out. SPX eventually made the low of the day at 1194 at 10 a.m. SPX made a feeble attempt to rally and didn't even get to the 38% level fell short at 35% and closed at 1199. 1199 is actually bullish in my calculations. 1200 is a round number and any close below round number upto 3 points is bullish and anything over upto 3 points is bearish. Tomorrow we could see a very short term rally. Looking at this the other way IF there is a rally I would short for I do not think this hit is over. I know/think the decline has started and it should take at least 50% pull back to 1133. How we get there is immaterial. On very long term IMO we have finished 4 at 1237 having completed 3 at 666. This decline then should be a 5 and it should be slow and laborious making every one guess and second guess. This is options week and close to holidays. As the week wanes the participation will get lower and volume should drop. That is really not great condition for rally.
The chart on the left is SPX on the hourly. It is my accordion chart. I am beginning to like it a lot. Red lines are main channels. Blues are 1/2 and greens are 1/4 channel. Spx is at the blue and its a good place to bounce. Thats why I think we should get a rally on Mon.
The chart on right SPX daily. It has completed the reverse H&S and is declining . The moving average is 22 days. I use this some times. My preferrred is 77 on the hourly. SPX is bouncing exactly from this mvg. avg. line That is generally bullish.
Bottom line IMO we should have a rally on Monday and the rest I will wait and see how Mon unfolds.
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