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SPX: Brief Rally To Small Wedge Top

Published 02/23/2017, 12:18 PM
Updated 07/09/2023, 06:31 AM

Trump Rally: Exhaustive Buy Climax At Measured Move Targets

Pre-Open Market Analysis

Yesterday was another trading range day. While Monday gapped up, the gap is late in the bull trend and part of a buy climax. It therefore will probably be an exhaustion gap. Hence, the Emini will probably close the gap within the next few days. If today gaps down, there would be a 2 day island top.

While the odds favor a test of the December close within the next 2 months, most tops fail. Therefore selling every top is a losing strategy. It is better to wait for a strong top or for a strong bear breakout. The Emini has neither yet. Hence, the odds still favor sideways to possibly up a little more.

Last week had an ii late in a bull trend. Therefore, the Emini will probably enter a trading range within a couple of days. Furthermore, the Emini is in a zone of measured move targets on the weekly chart. In addition, it is in a buy climax. Therefore, the odds of much higher prices near-term are 40% or less.

Overnight Emini

The Emini is up 3 points in the Globex session. Because the daily and 60-minute charts have been sideways for 2 days in a bull trend, the odds favor at least one more new high. If today opens here, there will be another gap up. Since the rally is a buy climax, the odds are that it will not last more than a day or two.

Because it would be a 3rd push up on the 60-minute chart, a reversal down would create a wedge top. A pullback from there could create a trading range going into the March 16 FOMC meeting. There is still a 60% chance of a 5% pullback to the 2016 close within the next couple of months. A catalyst like a rate hike will probably start the correction.

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