SPX - Higher, before lower
I know for quite sometime I have been bearish. Clearly the trend has been higher. I was wrong. I allowed reasoning (high valuations, impending rate hike, uncertainty surrounding new administration, uncertainty with Europe) to cloud my judgement. Don't fight the trend, and more importantly remove any beliefs you have about the market. The market doesn't care what you think, at least fundamentally.
Below are my thoughts:
1. Based on Fib extension (relying on the Dec. '15-Feb '16 retracement) as shown by 'A', a breakout to 230 is not unreasonable before a possible pull back. I used this retracement period for a catalyst higher because it is the largest retracement we have had in the past 12 months.
2. Based on Fib extension (relying on the Aug.-Oct retracement) as shown by 'B', a break out to 226 is not unreasonable before a pull back. I focused on this retracement period because it is the most recent retracement period to use the Fib extensions.
I believe any pullback will be to the 200 DMA, which is at about 211. Will probably be a little higher by then. I wouldn't doubt that we may go to 208, to fill that gap set before the election.
As we see volume spiked at the last 2 days, so that adds some tailwind to push higher.
Also, notice everytime the CCI indicator peaked, the SPY still pushed higher by about 2.0%. So a 2.0% increase from where we are today pushes us to about 230. (225 * 1.02 = 229).
My overall thesis, We got to about 230, before trending lower to the 200 DMA at about 210-211.
Happy Trading!
Below are my thoughts:
1. Based on Fib extension (relying on the Dec. '15-Feb '16 retracement) as shown by 'A', a breakout to 230 is not unreasonable before a possible pull back. I used this retracement period for a catalyst higher because it is the largest retracement we have had in the past 12 months.
2. Based on Fib extension (relying on the Aug.-Oct retracement) as shown by 'B', a break out to 226 is not unreasonable before a pull back. I focused on this retracement period because it is the most recent retracement period to use the Fib extensions.
I believe any pullback will be to the 200 DMA, which is at about 211. Will probably be a little higher by then. I wouldn't doubt that we may go to 208, to fill that gap set before the election.
As we see volume spiked at the last 2 days, so that adds some tailwind to push higher.
Also, notice everytime the CCI indicator peaked, the SPY still pushed higher by about 2.0%. So a 2.0% increase from where we are today pushes us to about 230. (225 * 1.02 = 229).
My overall thesis, We got to about 230, before trending lower to the 200 DMA at about 210-211.
Happy Trading!
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