Has the market really topped? What's in store for next week? Those are the two biggest questions that are going through my mind right now. To answer the first question... I'm not sure yet? It all depends on how far down we go in the next week or so. If we take out the 1030 SPX level, then I will have to say that the market has most likely topped.
Now... with that being said, I don't think we will take it out on this coming down move. Christmas is coming up soon, and that means that traders will be going on vacation. This will leave the market with very light volume... and we all know that light volume usually equals an UP market.
Regardless of the light volume or not, the end of December is usually Bullish... which is why they call it a "Christmas or Santa Claus Rally". But, for the nearer term... meaning next week, I believe we are headed down. I'm going to present 2 different Scenario's, but both are pointing down.
Scenario ONE
We open Monday and rally up a little more as Monday's have been bullish lately, plus some of the traders will still be out for the holiday. Light volume is also common on Monday's. Let's not forget that the governments around the world have had the entire weekend to come up with a plan to ease the fears of default over in Dubai. Trust on this one... they will announce something positive to curb anymore heavy selling.
However, the rest of the week should have lots of economic news coming out... and most of it should be negative. Any rally on Monday should be shorted as I expect the rest of the week to sell off. If it's really bad, then the target is 1030-1035 SPX. The "not so bad news" target is 1045-1050 SPX. If we rally up on Monday, then the 1045-1050 SPX area is where I'd expect the low to be this week.
Scenario TWO
We continue down on Monday to the 1070 area to fill the gap, then rally back up on Tuesday to hit the 1085 support turned resistance level. Then fall the rest of the week to 1030-1035 SPX. This is the most bearish forecast, and I really don't see it happening. But, anything is possible?
Ok, as you can see... both Scenario's call for the market to be quite a bit lower toward the end of this week. As I previously stated... I'm am now short the market, and will remain short regardless of how high the possible rally on Monday is. I'm sure that the market makers will try to scare all the shorts out of the market by taking it as high as possible.
Come to think of it... they probably have a lot of people short right now, which could be the fuel they need for a nice "short squeeze" on Monday. Again, I will ride out any push higher! The maximum that I can see is for one big "Hell Mary" push to touch the 1120 level. I don't really see it happening, but it's possible.
Looking forward, I think the more probable scenario is for a nice sell off this week, and then a rally next week, that could simply form a lower high, or possibly a new high up to that 1120 level. I don't think they will make it this week. Simply put, this week should be down, and next week should rally back up.
K.I.S.S.
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Red
Got the other Astro site you mentioned, thanks, have to study!
Hi, my call is we close up this week, as long as the TSX stays above 11300 and the HangSang/Shangai markets stay up will be good to go…. Im long unless 11300 gets broken and I will add more Longs if 11650 is breached….
Lets see how this shakes out
Could be Joe? Anything is possible now, as we don't really have a direction chosen yet. Tonight's post simply states that we could go sideways for awhile, before choosing a direction.
Best of luck to both of us… and thanks for stopping by and posting. Bullish and Bearish opinions are both welcome. That's how we all become better traders.
Red
Hi, my call is we close up this week, as long as the TSX stays above 11300 and the HangSang/Shangai markets stay up will be good to go…. Im long unless 11300 gets broken and I will add more Longs if 11650 is breached….
Lets see how this shakes out
Could be Joe? Anything is possible now, as we don't really have a direction chosen yet. Tonight's post simply states that we could go sideways for awhile, before choosing a direction.
Best of luck to both of us… and thanks for stopping by and posting. Bullish and Bearish opinions are both welcome. That's how we all become better traders.
Red