sp'weekly7
sp'weekly9 - the next fib retracement
Summary
So, a positive day for the market, but really, the past two days of price action don't nullify what we saw last Friday. Friday was the first, and most important down wave we've seen in 20 months. The recent VIX action is similarly indicative of some 'trembles in the market', that should be taken seriously.
We have two consecutive red candles on the 'rainbow' weekly cycle charts, and we've not seen that since Nov' 2012.
As for weekly'9, the sp'1550s would be a very natural target in the months ahead...assuming 1850 is not broken above. For the big money out there..it makes for a very simple ultimate short-stop level.
The alternative
I endeavour to keep an open mind, and the following chart highlights the original count, one that I'd been holding to since last summer.
sp'weekly'8
If bears don't break <1765 within the next week or two, and the market puts in a few daily closes >1820..then I'll revert back to this. In the grand scheme of things, it just means the bears will have to wait an extra month or two.
The following chart links directly to the above weekly'8 scenario
sp'daily3b
We'll know soon enough. either 1765 is taken out..or the bulls will manage to break back into the 1820s..and keep pushing. As ever..for the serious money..trading stops will be vital.
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Looking ahead
Wednesday will of course be all about the FOMC, the announcement is made at 2pm..and on this occasion, I believe there will not be a follow up press conference.
*next sig' QE-pomo is not until Friday - which will be a VERY heavy one of $5bn or so.
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Taper'2, yes or no?
Trying to guess what the paper printing maniacs at the US Federal Reserve will decide is largely a pointless exercise. Even more of a waste of time, is trying to fathom how the market might react to any particular decision.
Regardless, I'll make a guess... monthly QE cut from $75 to $65bn a month. No doubt the market will also be interested (if not somewhat placated) with the usual talk of 'extended low rates'.
Considering the bigger weekly index charts, bears should be roaring..and clawing, for a hard reversal..either late tomorrow..or early Thursday (post GDP Q4 data). Any daily closes >1820..and that is a real problem for those on the short side.
Goodnight from London