Big day today as the FED is likely going to cause a lot of wild moves. From a technical point of view the short term charts are getting close to overbought and they are up against resistance from the gap window. I can also count 5 waves up from the low, which I think is a bigger wave 1 up, so a wave 2 down is likely coming today after the FOMC.
Again, I don't think we are going to repeat the 12/18 move where we drop hard that day, bounced like yesterday and made a lower low... which would be compared to today. I think we make a higher low, like maybe the 6000 level or so? It should be a wave 2 and might play out in an ABC move were we get an early pullback today (for the A wave), before the meeting, and the a B up into the meeting at 2pm EST. It will setup the market perfectly for a nasty drop into the close afterwards... BUT, it should NOT take out the Monday low.
It should make a higher low that sucks the bears into thinking we are going to tank hard the rest of the week. That's the trap in my opinion as the daily chart is still bullish on the MACD and the RSI, and so is the 6hr chart. That implies we will turn back up on Thursday to start a wave 3 that should be very powerful as it will have many bears trapped.
This pattern will be a "inverted head and shoulders" with 2 left shoulders and 2 right shoulders. The move up should easily make a new all time high and my thoughts of a 100+ over the current high will be an easy achievement for this pattern. There's earnings out after the close today for some big name companies, which I'm sure could be used as an excuse to start the wave 3 up. It's all in the charts now, so all we need to see is one more pullback today into the close. Then a gap up and go tomorrow keeps the bears trapped that hold short after the close.
Have a blessed day.
