I am getting busier these days as the quarter is closing, hence my apologies if I do reply late to your messages. I will be sharing January's road map, the turns and perhaps touching a bit on price targets after December. News will start surfacing regarding eurozone problems again etc.
We should see weakness in the markets in January, and in my opinion, that is a major buy period. Tomorrow would be another gap up day if history repeats.Īll charts are pointing to 23rd Dec for a turn. This is required if we are going to top on 23rd Dec. We should see a consolidation today, or general weakness in the markets, perhaps closing negative. This had been the trend recently.markets gapping up or down huge, and consolidating during main hours. Major indexes were up nearly 3%, though most of the action took place pre-markets. Another reason to believe we are going to see a weak Jan. Overall, USD is moving up and points to higher highs in the next few weeks. USD has turned down slightly, coinciding with the market rise yesterday, however, it is still well within the rising channel and should again, turn up on 23rd, targeting 79.50 area as the bottom. This has to occur if the thesis is working. To form a positive divergence, the VIX has to turn up today, meaning the general markets will be weak. So I am a expecting a mini-crash in the main markets after 23rd. Once it bottoms, the initial run-up will be very fast & furious. It is forming a descending wedge with positive divergence on the dailies. The VIX chart keeps me on my toes and this is one of the reason I am wary of this rally. So the planned target low date may turn out to be a high date. However, be careful that price cycle inverts from time to time. I will provide some estimates to the price targets nearer to the date. Timing wise, 4th - 6th Jan could be a low, before bouncing up in the 2nd week of Jan. This aligns pretty well with the bullish descending wedge in VIX.įor swing traders, it is a good time now to sell away your longs and start positioning for shorts. My observation is that the SPX will be carving out a bearish rising wedge with negative divergence forming. However, as opposed to Tuesday's moves, I think for today, we should see a very quiet range bound day. Futures are currently pointing to a positive start, gapping up a couple of SPX points. I mentioned too, that prices could see a gap up today, if history is of any guide. I would like to express my gratitude for your support and I wish everyone a wonderful Christmas and have a great long weekend.Īs mentioned yesterday, it would be a day of consolidation, and price actions resulted in a Doji. MACD has crossed down, tying with a rise in markets on Tuesday, but as price is now on support so I wouldn't expect to see a big drop in USD. Both the hourly and dailies would be on positive divergence. Look at the MACD, it has crossed up and if Tuesday sees a lower VIX but with a higher MACD, there we have it, the recipe for a turn. We formed a narrow range bear flag on the VIX hourly chart, so we could see a lower vix next Tuesday corresponding to a higher high on the SPX. I remain confident just like last week and I stick to my view that we are going into general weakness till the first week of Jan.Īs volume is light, I expect markets to be either in a narrow range or start falling next week. Also, 1270 is 0.618 extension of the rise from 1158 to 1267.īut If the markets start falling right away and goes below 1248, it is a warning that a top has already been in place at 1265. Since 1260 has been exceeded and if we are still in C wave, the targets will be raised to 1270-1275.
This also implies that there will be a spillover high on 27th Dec (markets are closed 26th).Ģ3rd Dec is a cycle turn in my books and giving +-2 days, 27th Dec is acceptable. If the markets do not fall below 1248 on Tuesday, then the price actions of yesterday will conclude that we are still in C wave of the wedge, and we have D & E to go. Yesterday, I reviewed the price targets and gave alternative scenarios. In the postings sent last week, I told my readers that I remain confident for a rally this week and on Tuesday 20th Dec, markets gapped up 3%.Īfter wednesday, markets started going into a narrow range, moving a little higher and higher on light volume. I gave a target near 1200 levels, which was at fib 61.8. As at last week, the sentiment was pessimistic as the indexes start to fall, hitting a low on 19th Dec, at 1202.
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