I highlighted the area around which the market has been trading since August in last night’s post and update that chart here. As I mentioned last night, the area could be expanded to the upside by a few points, and I have done that on tonight’s chart. This better captures the price activity vis a vis this area in September and again in early November.
We pulled down into that area today and then rallied up out of it. It wasn’t a spectacular rally, but we did close above yesterday’s close and better than half-way up today’s range. Given that the last three days have been very negative, that’s positive. Also, significantly less volume came in on the downside today compared with the last few days. Sellers look like they have grown a bit tired. You can see volume was quite light today. All of this sets us up for a potential rally tomorrow or Monday.
Should we rally tomorrow, it will likely be difficult for the market to mount a sizable up move. Yesterday’s high of 1226.50 is the first hurdle to overcome. Shortly after that, we have two closes at the 1230 level from December 8 & 12. These days are noteworthy because the market turned down from the last swing high on the 8th and drove back down again decisively on the 12th after an attempt by buyers to rally back up. I would anticipate supply to reassert itself on an initial foray into this area.
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