This update might be a bit long to read.
One interesting observation is that the whole move from the 2021 open was erased going into the 2022 year close! Noted on the chart: “Red line is 2021 close – 3756.06; 2022 open was – 3764.68”
I’m still in one more low to be seen next week, and my main target is still the same – a gap fill 3738-48SPX zone.
If 3744SPX doesn’t hold on daily closing tomorrow or Wednesday, I’m also watching a potential extension zone down to the next 3686-3709SPX support zone. Then 3700SPX becomes the next Maj support target on the daily closing level.
It’s a double-directional change day tomorrow, so expect a move out from the previous highs and lows, Up or Down.
On the upside it is 3890SPX, and on the downside it is 3765SPX.
Since we are in the bearish trading cycle, I expect the trend to continue into early next week’s low.
There are two dates for the low I’m watching next week – the 27th and 29th.
- Both suppose to mark a low. So 29th can be either a lower or higher low, but a buyable low going into Jan open.
There is a chance we already saw the low on Dec 22nd, and the following two lows will be higher lows. But it doesn’t look pretty with fibs even though the price stopped in the middle of 50 and 61.8% retracement from Oct 13th low. It will make a better picture if it makes at least a marginally lower low into the 3738-48SPX zone
Too many are looking for a collapse in price in Jan; that’s one of the reasons we are actually going to make a high in Jan; my ideal timing for the high is on week 16th of Jan. That would be either a second wave up or a B wave up with lower levels to be seen in Q1 of the following year.
The target for the B or 2nd wave rally is 3950-60 and i wont be surprised if we stretch to 4000-4050SPX
I have a perfect price confluence at 3369-3418SPX for the A wave to bottom>
- Also 3393SPX is Feb top, and 3389SPX Nov 3rd top, both 2020
- Unfilled gap to close is at 3369SPX
After the Q1 low (which I think will be a significant low for the entire move from Jan high in an A wave manner), I expect a big 3 wave move up to at least 4250-4400SPX to mark the B wave. (chart attached).
The zoomed-out chart is quite busy with notes; feel free to zoom in and read those from the chart.
Something to note here is the difference between DOW and SPX with NASDAQ. The DOW is much stronger and where the capital flow from European markets is going. Some serious events should hit the markets in Q1, possibly a bigger war in Europe or other European instability along with Asian tensions, which will send a significant flow of capital into the US (safe heaven) markets.
So expect DOW to make new highs when SPX and NQ won’t.
Interestingly Monthly SPX resistance and support targets are at 4302-10SPX and 3210SPX, respectively.
To conclude my analysis, my game plan for the next week:
- Short the open (already started NQ short from 11180 with 25 points stop, will restrike if it goes to 11265 and 11325).
- Will start buying tomorrow (27th) and add on 29th for a rally into Jan 2nd high and then Jan 6th second high.
- I would not do much of day trading as Im positioning myself for a swing trade on the upside and will be closing my swing short tomorrow and on the 29th (ideally at 3744SPX or below)
- If day trading, watch for @Tracey trade posts, as she is amazingly good with scalps!
P.S.Please note all the pink lines are the gaps waiting to get filled.