SPX, 4 Jan: Rally or Collapse.
Hello traders, happy New Year 2022!
The end of 2021 has given us a massive short squeeze as commercial traders booked profits and realised tax losses from short exposure. The beginnings of each bullish impulses correspond to the Solar eclipse on 4 Dec and Winter solstice on 21 Dec.
This ‘Santa rally’ has catapulted SPX is right towards the multi-week resistance that we can trace back to the crash of 2020.
Let’s take a look at the TA what to expect.
Geometry:
SPX is at the upper boundary of the pitchfork. The question is if momentum can be sustained to break it.
Elliott:
We can count a completed 5-wave move to the upside. Alternatively, wave 5 can extend higher so that we are now in a momentum wave 3 (in green) that takes SPX towards 5k.
Moving Averages:
Price got rejected at the upper boundary of the Keltner Channel, but found support on the 9-day MA, indicating an active sequence.
Oscillators:
The Stochastic is overbought but can remain overbought for several more days. A strong bearish divergence appears on the RSI and MACD.
Correlations:
DXY is at a multi-month resistance. Yesterday's 8% yield spike prevented a breakdown. If yields continue to climb, capital may begin to flow out of equities.
Summary:
The markets are still trading at ‘holiday’ volume, so that we do not know the intentions of the larger market participants. Gann reminds us that the markets make important highs or lows around 5-6 January.
The idea is to observe if the active 9-day MA sequence holds and leads us towards a breakout. This could result in a massive rally if the upper pitchfork boundary becomes re-tested support.
If the resistance holds, we may expect a collapse back towards the median line and potentially sub-4200, before SPX makes another attempt at the 5k mark.
The end of 2021 has given us a massive short squeeze as commercial traders booked profits and realised tax losses from short exposure. The beginnings of each bullish impulses correspond to the Solar eclipse on 4 Dec and Winter solstice on 21 Dec.
This ‘Santa rally’ has catapulted SPX is right towards the multi-week resistance that we can trace back to the crash of 2020.
Let’s take a look at the TA what to expect.
Geometry:
SPX is at the upper boundary of the pitchfork. The question is if momentum can be sustained to break it.
Elliott:
We can count a completed 5-wave move to the upside. Alternatively, wave 5 can extend higher so that we are now in a momentum wave 3 (in green) that takes SPX towards 5k.
Moving Averages:
Price got rejected at the upper boundary of the Keltner Channel, but found support on the 9-day MA, indicating an active sequence.
Oscillators:
The Stochastic is overbought but can remain overbought for several more days. A strong bearish divergence appears on the RSI and MACD.
Correlations:
DXY is at a multi-month resistance. Yesterday's 8% yield spike prevented a breakdown. If yields continue to climb, capital may begin to flow out of equities.
Summary:
The markets are still trading at ‘holiday’ volume, so that we do not know the intentions of the larger market participants. Gann reminds us that the markets make important highs or lows around 5-6 January.
The idea is to observe if the active 9-day MA sequence holds and leads us towards a breakout. This could result in a massive rally if the upper pitchfork boundary becomes re-tested support.
If the resistance holds, we may expect a collapse back towards the median line and potentially sub-4200, before SPX makes another attempt at the 5k mark.
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