I am posting this a little late – I had meant to post last night but forgot to publish it!
We are just back from the Thanksgiving Holiday where we spent time with our family in New Hampshire hiking and enjoying our beloved mountains. Now, it is back to work!
Today (Tuesday, November 27), the market failed to rally higher. Resistance at the 1407 level held throughout the morning, causing an afternoon reaction that drew in supply. This is typical behavior for a change in market trend. After several days up where any pullbacks typically occur in the morning, we see the market sell-off in the afternoon. We can expect downside follow-through for tomorrow and perhaps longer.
Due to the very oversold condition of the market in mid-November (labeled A on the chart) along with an increase in volume at the oversold levels, the market may have further upside after this anticipated pullback. Whether it does nor not will depend on how it behaves in the next few days.
A key level will be the area around 1380. If the market can hold this level, stopping a resumption of the downtrend, then it will have an opportunity to break the downtrend channel. If it does that, we can then see higher prices in the near future. Failure to hold the 1380 area would indicate at least a testing of the high volume from 1365 and below.
Given the background conditions of being oversold followed by the strong rally over the past several days, I view the odds as favoring holding around 1380 and subsequent further upside, but I will let the market tell me what it wants to do.
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