Looks like the inverted head and shoulders is playing out this morning in the futures as the ES has pushed through the falling red trendline of resistance.  Next up will be a new all time high if the bulls can keep this momentum going, and of course the all important 2600 level.  The MACD made a lower high yesterday and appeared like it was going to rollover but the light volume of this holiday week must have taken over and turned it back up as it doesn't seem ready to quit yet.  It should still make a lower high then the previous +4.0 high, but I'm not sure where it will stop.

Time wise I don't think it can go more then one more day, if not later this day?  So, we could see a pullback start tomorrow but considering this is Thanksgiving week I seriously doubt if it would amount to much.  More likely it would be a sideways to slightly down day.  For today though I don't see much to do.  The move I was expecting yesterday has now happened but with the overbought 60 minute MACD the futures might not be able to push through overhead resistance today, so it's not something I want risk a long trade on.  I'm just in watch mode for today and will see how the close sets up.  There might be a short later today but again, I really don't see much of a move down tomorrow even if this short works.  Maybe Wednesday we'll get a good setup?

Another week is upon us and it's also Thanksgiving week.  It should be a light volume week due to the holiday and of course that favors the bulls.  For today the futures are flat with no clear sign of direction.  On the 6 hour chart (not shown) the MACD's went from overbought to flat and are now just a hair below the zero level right now.  It acts like it wants to curl up and support a rally but it may need some more time first, so today could be choppy.  The 60 minute MACD however shows it hitting +4.5 as a peak last week, which was very overbought.  Then it dropped all the way down to -3.0 by Sunday night to get oversold.  Now it's pointing up and is almost to the zero line where turns are common.

But with the light volume expected this week and the 6 hour chart trying to turn back up too, I'd lean toward a rally of some degree with the MACD going through the zero line and making a lower high to create negative divergence.  Of course that's not good for a strong rally but again it is a holiday week and the bulls are the favorite child of the Fed's, so we'll likely see the negative divergence have no effect on the futures today.  Possibly tomorrow it could roll back down from it but today looks more like a slow move up as traders just look forward to Thanksgiving this Thursday and scale back on positions.

Pattern-wise it looks like an inverted head and shoulders pattern is in play.  So if the bulls are going to rip it I'd think they would rise up to the falling red trendline today and trade sideways until the close to make a bull flag while allowing the MACD to reset from which will probably be overbought when first hit.  Then if they successfully reset the charts they can push through resistance to fulfill the bull flag and inverted head and shoulders pattern... thereby making a new all time high again.  I'm still not seeing 2650 or more but anything is possible with the bulls as they have the holiday week as an extra thing going for them, plus the Fed's always bailing them out as well.

I would have considered going long if we drifted down today and closed red as I think the charts would have been oversold enough to support a powerful rally.  But right now I don't see any powerful rally, just a slow grind up that I'm not chasing.  We'll see how the charts align up at the close but I expect negative divergences on them.  That still doesn't imply that we drop on Tuesday as again, most likely we'll push through resistance and make another new high.  But if for some reason the bulls are able to do that today and stay under 2610 or so (it's flexible a little, and it's also about the strength they show... a slow grind is preferred) then I'd be leaning toward a turn back down on Tuesday.

For the bulls to reach higher levels they really should just hit the falling red trendline of resistance and go sideways into the close, then tomorrow rip it through it as they would have a more bullish chart alignment doing it this way then exhausting themselves by doing this entire move today.  I would still not expect some big drop on Tuesday if they did make the entire move today, as it's still a light volume week and I wouldn't expect the bulls to give up that fast after just reaching a new all time high... especially since it would be over the 2600 level, a milestone they have been wanting for quite awhile now.

How to play this?  I don't see any good setup for swing traders.  It's moving up right now before the market opens and I certainly would not go long with overhead resistance so close now.  I wouldn't short it either as volume is expected to be super light this week.  I would only go long if it rolled over and fell into the close to make a higher low then the 2555 level and lower low then the current premarket low of 2568 as that would likely setup a higher low on the MACD's, which would be positive divergence going into Tuesday.  If we could do that then I'd be interesting going long.  Otherwise I'll have to wait on a better setup for the next long or short.

It looks like we already had the strongest wave up last Thursday, which generally is the wave 3 or C wave, and that's the wave I like to catch.  If that was the case then we could be in the 5th wave up now and there's no telling how high it can go.  It might be a strong wave or a weak one.  It could sub-divide into 5 smaller waves, which would be likely if my first thoughts of a move up to resistance and then sideways the rest of the day is what happens.  I'd then think that this likely 5th wave up is dividing and the first move up into the falling red trendline would be the smaller wave 1, then the sideways wave 2 into the close.  That would setup a smaller wave 3, 4, and 5 to follow to complete this 5th wave up.  We might see the smaller wave 3 on Tuesday, then the smaller wave 4 down and 5 up on Wednesday... which would end the 5th wave up the day before Thanksgiving and end the entire rally from the January, 2016 starting point.  That would setup the half day after Thanksgiving as the first down move that would start the multi-month correction.

This is all just me guessing of course but it certainly would be the perfect way to end the rally and trick the most bulls as I doubt if many will expect a correction to start in late November and into early December.  So the bulls would probably keep buying the dips while the bears go to sleep for the expected Santa rally, which really doesn't start until after Christmas, so early December could still see some selling before Mr Claus saves the day.  All in all this should be an interesting week as we could indeed finally see an end to this relentless bull for awhile.  Wouldn't that be a "Thanksgiving Surprise?"

We came within 7 cents of hitting the 259.11 FP yesterday on the SPY... pretty impressive.  Today we have the 60 minute futures chart getting very overbought yesterday hitting a peak of +4 on the MACD's and now it's fallen back to only +1 and hooking back up.  There was a tiny pullback in the market when this MACD reset but basically it held it's own.  Today I'm looking for this MACD to turn back up and put in a lower high by the close, and at the same time the ES should go up a little high too.  I'm not expecting another 20+ point rip, but more like 3-6 points would be my best guess.

This means that I'm basically expecting a flat or consolidation day where the bulls hold their ground while the bears watch all their puts expire worthless on this monthly option expiration Friday.  This should leave everyone guessing about next week with most being super bullish as we go into the Thanksgiving holiday on Thursday.  It could setup the perfect bull trap if SkyNet wants too as I remember back in 2011 (I think?) when they pulled a stunt the half day trading Friday after Thanksgiving and tanked the market pretty bad as all the traders were gone for the long holiday weekend.

It was Dubai that was blamed for the big drop, and it was perfectly timed to go hit all the bulls stops when they where home eating turkey.  Then over that weekend the fake news media downplayed all the Dubai problems and by Monday morning the market had recovered almost all the move down.  I would not be surprised to see something like that happen again next week on a Friday after Thanksgiving again.

The daily chart on the SPX is still very bearish looking to me and needs another lower low, so what better time to fool the sheep then on a holiday?  Plus it lines up with the bears not being positioned as they know better then to short the week of Thanksgiving.  For this to play out I think we need a flat day today (preferably a slightly green close) to keep the bulls long over this weekend.  Then Monday/Tuesday we drift down a little for some wave 1, then back up Tuesday/Wednesday for a wave 2... all while staying under the current high, which a new one could be put in today and that would still be ok... but if it does it shouldn't be by more then a few points (again, I'm thinking a lower high today but won't rule out a slightly higher one).  That would setup a wave 3 of some degree down for Friday since the market will be closed on Thanksgiving.

These moves up and down early next week should be subtle as not to alert the bears that this is setting up.  A lower high today would be preferred as that would keep the bulls long expecting the current high to break and 2600+ to finally be reached.  We'll call this entire forecast "scenario one" and it's my favorite and then one I think has the highest odds.  Scenario two would be for the market to drop today hard and possibly retest the Wednesday lows and then rip back up into the close (or line up bullishly for the rip to happen on Monday), which would very bullish as they would have hit the stops on all the bulls and trapped a lot more bears, which would give them plenty of fuel to squeeze up next week to a higher high... could be in the mid-2600's if they get enough bears on-board short.  I won't rule this out but I also don't expect it to happen.  Scenario three would be a rip up to new higher high above 2600, which I think will be a short by the close as it will just be too overbought to hold up that high into Monday.  This would be fine up to 5-10 points over 2600, but if they rip it much more then that I'd stand pat in cash and wait until Monday to see if there is any follow-through on suggest a powerful move.  It would be compared to yesterday's 20+ point rally as it was so strong you kinda knew to wait until the next day (today) to see what happens as shorting those kind of rallies is very risk.  Best to wait and see for the next day.

In summary, scenario one is what I expect today and it sets up the market to tank hard after Thanksgiving.  Scenario two is super bullish and suggests we go up to the mid-2600's, maybe to the low 2700's, which could all be done by the end of this year.  Scenario three is still bearish and again suggests a drop after Thanksgiving but that's only if we just slightly pierce 2600, as if it goes too high then it should again go up to the mid-2600's to low 2700's like scenario two suggests.  Personally I think we are either already topped or will be early next week.  And I think this top will be below 2610, which sets up the big drop after Thanksgiving.  If this plays out like I think it will then early December should be a disaster for the bulls.  I'll speculate more after I see how this plays out but the more traders that keep expecting 2600 and beyond the more I think the opposite.  Have a great weekend everyone.

Yesterdays bearishness took the market down below the two prior lows in the 2560 area but wasn't enough to reach the next set of prior lows in the 2542 area.  This morning we are back to rally mode as the bulls push through the falling green trendline.  But I don't think they are completely out of danger yet as there's no positive divergence yet which suggests a lower low yet to come.  Therefore I would not trust this rally as it's likely to end abruptly and reverse back down.  The "when" part is the hard part as I'm not quite sure on that one.  But I'd say we should see the bulls hold on for a couple of days at least, so next Monday or Tuesday they should have exhausted themselves with this rally.  It will probably go up in some kind of 3 or 5 wave pattern, so this mornings' gap up will most likely end quickly and be the first wave up.  Then I'd expect some kind of pullback throughout the day for the second wave down.

Friday could be the remaining waves is my thinking, but I won't rule out it extending into early next week.  At this point I don't see that happening but forming tops is sometimes a long drawn out process so I can't forget that.  There's a "possible" FP on the SPY showing a lower high then the current high, which might just be the coming high off this rally?  It's too early to know for sure on that but it's in the back of my mind should this rally get up close to that level.  For now I'll just be watching the charts for the next bearish alignment to form which could be by this Fridays' close.  What I would want to see is weakness in this rally up today and tomorrow, along with 3-5 waves up and down having formed.  Also I'd like to see some short term charts get overbought on the SPX.

On the flip side if this turns out to be a strong rally up then any sell will likely be pushed out until early next week.  Overall I still see this market as bearish as the daily chart on the SPX is still pointing down and drifting lower each day, and that tells me we have more to go on the downside.  The question is "when"?  The 200 day moving average on the SPX just happens to be around that redish (or pink?) horizontal trendline of support on the ES, which again is about 2542, so there's another reason to expect that area to be tested.  This move down could come at anytime but right now I'm still thinking the bulls will carve out 3-5 waves into at least Friday before exhaustion.  So I'm not expecting that down move to show up today, and probably not on Friday either, although that could change by the close today.  I don't really expect it to, but possible.

My thoughts for today are that we'll end this first wave up at shortly after the open and drift down for the second wave later today, which should setup Friday for the stronger third wave up.  Bull markets usually have 5 waves and that could be the case here too.  But if it's only a 3 wave move (ABC) it's still the most powerful wave, so this coming pullback for the second wave down (the B or wave 2?) is likely a good opportunity for a nice long that could indeed take us up to the FP on the SPY just under the current high a little.  So while I don't think the selling is over it appears to be on hold for a few days.

The bears did indeed turn that MACD and Histogram bars back down yesterday and are continuing today.  On the 6 hour chart you'll see how the MACD's tried to turn back up yesterday when the Histogram bars were just barely below zero, which is a common place for "turns".  Normally when you see an oversold chart once those Histogram bars rally back up to zero they commonly cross back to positive and a strong rally happens, but this time there was too much downward pressure still from the daily chart and it instead just turned back down and is now lower again.  The MACD's are getting down into an oversold area as well so a bounce in the market is likely just around the corner, probably tomorrow if not Friday.

From the looks of things right now I think we'll continue down today/tomorrow until we hit the pink horizontal support level around the 2542 level where the market bottomed at previously.  It will be a nice triple bottom and a strong bounce should happen from it.  How strong is still unknown but right now I think it will be a lower high then the current all time.  Others see the bull market racing on to new all highs again and I can't argue with that as it's been the trend for a long time now.  I just see things differently and think the current high will hold for awhile.

For now lets just play it day by day and I see more weakness all day with a close near the lows likely.  If it's down at that support level I'd exit all shorts and take a small long for at least a one day more, maybe more?  It's not going to be easy now that Volatility has returned in the market.  Bigger and faster swings will likely continue as this "topping process" works its' magic.  It's purpose is to trick both bulls and bears alike and not let either be on the right side of the trade.  That's probably why the bounce yesterday off the morning lows did not hold into this morning.  It's worked for a long time as the "buy the dippers" always came in on moves down like that but this time it failed.  That's a clear sign to be that a top is being formed and I think the all time high is it, and will hold for awhile.  Anyway, for today I'm looking for the "buy the dippers" to come in again at the open but later on I think whatever small rally happens will fizzle out and we'll continue lower into the close with that triple bottom as my target low for this move.

This morning we are looking at the 6 hour chart of the ES Futures for clues.  As you can see its' MACD's are now below the zero level and still bearishly aligned.  They seem to be struggling to turn back up like they have done many times in the past when aligned in this fashion.  It's the "point of recognition" for the bulls where if they fail to hook it back up (and I think they will indeed fail this time) the bears will turn it down south hard.  Today is probably the last day from the looks of the histogram bars as they have come up from about -2.0 to just under zero right now.  With one or two more bars around that level while the MACD's go sideways I think the bulls will take their last breath and run out of gas, thereby passing the ball over to the bears by tomorrow if not late today.

This is a game of "time" and both bulls and bears only have so much of it before one takes over the other.  In this case I see the bulls as "running out of time" while the bears just wait.  I'm not sure they can even make it through today?  But if they some how hold the market basically flat (meaning it could be close slightly up or down... nothing huge) then Wednesday should be the day we see the current support area fail as the bears take control.  I see nothing bullish for today, bears are gaining a foot hold here and I think they are here to stay awhile.  I see this as the "calm before the storm" period and I don't see it lasting more then one more day.  It long overdue as we all know so we shouldn't be surprised to see this market drop over a 100 points in the next week or so.  I think we are going down to fill that 2462 gap on the ES Futures and stop somewhere above the prior 2417 low... which would trap most bears waiting to exit at that level and bulls wanting to go long.

So my best guess is in the 2430-2440 area for the low of this coming move down, and I think we'll see in happen within 2 weeks.  Yeah, that's a bold call but it's what I see in the daily chart of the SPX as it finally "cracked" last Thursday.  I say that because it was very overbought on its' MACD's and was going sideways for almost a month.  But last Thursday it turned down and it's kinda like a snowball that was at the top of the mountain around +20 then rolled down to a flat spot around +15 and now is at the edge of that flat spot and starting the next move down the mountain.  It's just starting and will gather momentum as the days pass, which explains why that 6 hour MACD on the ES Futures can't seem to turn back up positive.

There's a lot of pressure building right now on the daily chart of the SPX and I feel like most people don't see or believe it.  But I just don't see another higher high coming in the next couple of weeks.  I think the high is in for now and we are going down to fill that gap.  My thoughts for today are simple... bulls will try to hold on but bears are coming out of the woods in droves and while the bulls might survive today tomorrow is not good for them at all.

Looks like the bears are still in control this Monday morning.  The MACD's on the 60 minute chart hit the falling trendline and rolled over from it but they are making higher lows which is positive divergence on the short term.  The longer term (like back to late October) shows a lot of negative divergence, which tells me the selling isn't over with yet.  But we should have a bounce today or tomorrow, and it looks more like it might happen tomorrow.  For now though I think it's a "short the bounce" market until there is some "big time frame" oversold charts that setup positive divergence.  This short term stuff probably isn't going to garner more then a fast one day or less rally with the "still" very negative looking charts.  The daily chart on the SPX is just getting started on the move down and it's going to take several weeks in my opinion to get very oversold and end the move down.

At this point the high looks to be in for awhile.  If these charts continue to play out the way they are now we could see some serious selling in the next few weeks.  For today I'll be looking for a turn back up on the 60 minute MACD's which should let the market rally back enough to fill the gap down open expected I'd think.  Today is a Monday and most of the time they are too overly bearish, so I would expect some type of bounce here.  It's going to be tough (always is) for the bears here that try to short this market as from what I've seen in the last several years SkyNet usually doesn't allow too many good bounces to short at.  When they decide to take the market down they just drop it a little each day for awhile with small bounces and then one or two big drop days, which then wake up the bears.  Right now I don't think too many bears are shorting this market.  They are assuming this is just a small pullback and that we are going back up to 2600 or more, but I don't see that in the charts.

Yeah, I've been believing others with upside targets of 2650-2727 (Oscar Carboni), and a few other good traders/chartist that have similar ranges... but from what I see in the charts right now the current top is likely in and we'll be in correction mode for a month or more.  So at this point I'll be shorting the bounces as I'm expecting a nasty drop here this week and some of next week.  The ideal bounce to short from would be a rally up to the rising red trendline I drew in this morning.  It would target 2585-2590 (depending on "when" you hit it), but if this is what I think it is SkyNet won't give the bears such a nice spot to short at.  Instead we should only see the falling light green trendline hit, which is around 2580 or so... then a nasty drop that should take out the lows from last Thursday.

From an Elliottwave point of view the move down from the high to the low last Thursday could have been a medium A wave down, then the medium B wave up broke-down into three smaller waves up (ABC) with the C ending this morning (truncated) around 2585 where it hit the falling light green trendline.  That means this move down this morning is the smaller wave 1 down inside the medium wave C down.  So if we rally up to the falling light green trendline today and make lower high then this morning that would be the smaller wave 2 up... leaving the smaller wave 3 down inside medium wave C down to follow.  Again, I'm not some expert at EW counting but instead just try to line up the wave count with what I see in the technical's, and since I see more down coming this is the best wave count I can see that aligns up.  My thoughts for today are simple... look for a rally up to short at.

Quite a big move down we saw yesterday and I don't think it's finished.  I think this is the start of a serious correction.  For the first time in a long time I can see some breakdowns aligning up on the daily chart of the SPX, 60 minute chart and a small start on the weekly.  That rising blue trendline on the ES Futures was finally broken and it started in late August.  Today and Monday will be the test for the bulls as they need to make another higher high by then to prove to me that this is still a bull market.  Otherwise I see the trend changing to bearish and a multi-week correction is just beginning.

The charts will need that long to get oversold enough to end the coming drop.  Of course short term charts are overbought and should have us back to chop mode into Monday, possibly Tuesday.  Since the low yesterday most likely ended the ABC move down from the 11/7 high (with the C breaking down into 5 smaller waves) I think that entire move was just the first large wave down.  It could be just the one wave of a larger A wave... don't know yet?  But we should now rally in a 3 or 5 wave pattern into Monday from what I'm seeing and speculating on.  It will be the real test for the bulls and from what I think is setting up in the various charts it will only be a lower high, therefore some kind of wave 2 up or B wave that sets up a big move down to start after Monday next week and should last all week and likely into the following week.

It should be a wave 3 down (possibly C, again that's unclear right now) and when it's done I fully expect to see that old gap on the futures filled (2462) before it ends.  Yeah, that's a big drop but that's what I see the daily chart of the SPX right now.  I don't see anything that could change it either as it looks past that point now.  There's negative divergence on it previously and it started the breakdown yesterday.  So I fully expect a correction to happen over the coming weeks and I get the feeling it will blamed on Trump and his inability to work with Rep's and Dem's, as well as the tax code and it's problems.  There's of course the Fed's saying they will be raising rates this next FOMC meeting December the 14th to worry about too.  If they even hint that they aren't going to raise rates because of a weak economy we'll see a lot more then just a correction.

Let's not forget Rocket Man over in North Korea either as that could be blamed too.  Believe, they can come up with a dozen reasons for the coming correction but I see it in the charts and that's all that matters to me.  I'll add this note, if the news is bad enough this correction "could" turn into a crash.  I say "could", not "would"... so for now all I see is a nice correction.  When the rally back up starts then we can get better odds on whether we are going up to new all time highs again or a lower high that might lead to a crash.  I haven't even heard of a crash in November/December so I'm not really put high odds on it.  For now let's just focus on today and next week.  I think today we'll see some choppy action as the ABC up or 5 wave series up unfolds into Monday.  If all goes in favor of the bears we should see a lower high Monday to end the wave 2 up (or B up?) and then a nasty wave 3 down should start that I think will carry into the following week.  Have a great weekend everyone.