This week, the US Stock market as represented by the S&P futures (ESH13) continued its rally off the late December lows. The dip down to support at 1446 on Tuesday which immediately rebounded back up indicated that absorption was taking place. Volume was light on the lows, expanding on the rally intraday. After Tuesday’s low, the market made higher highs and higher lows the rest of the week.
Friday did not make a new high in the close, however. The range narrowed a bit and volume fell off. It was a choppy trading day—not unusual for a Friday. I note, though, that overall volatility is contracting so far in the New Year. Traders should take this into account, especially for setting intraday trade targets.
The weekly chart is right at the mid-September highs, closing slightly below the high level. Technically, we are in an upthrust position on the weekly, but I don’t see any weakness coming in thus far. We may very well see more trading around this level for a few days. Unless we see the weekly turn negative, close poorly and see volume start to come in to the downside, I am discounting the odds of an upthrust at this point.
For Monday, look for an opportunity to buy on a dip back around 1460. Since we are up three days in a row and Friday’s close was level, we can see another pullback if price is unable to hold the 1471 highs on a drive up early in Monday’s US session.
Overall, unless the sellers become active at the weekly high and turn the market down next week, the buyers continue to have the upper hand. We can see prices move up into the 1500 level and perhaps higher, if we can get over the current weekly resistance.
Free Webinar
On Wednesday, I’ll be holding a free webinar on the Wyckoff Method. I am finishing up the slides this weekend, and I think you will find it very useful to attend. We’ll go over some things that I don’t typically talk too much about for use in both swing trading and to give yourself an extra edge in day trading. You should be able to immediately use this material in your trading. We’ll look at using Wyckoff principles for stocks, the indices, day trading the S&Ps and a currency. You can register for the event here: New Year, New Start: Making Profit with Wyckoff Trading
Leave a Reply