SHORT TERM: higher open new rally highs, DOW +142
For the first three days of the week the Asian markets gained 0.7%, and the European markets gained 0.1%. The SPX has rallied from Friday’s close at 2596 to 2626 today, before closing at 2616. The US market has hit an inflection point. One that determines whether or not this rally is a B wave, or the Christmas low was the end of the bear market.
We’re using five criteria to hopefully determine which is the most probable outcome: size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low. First, this rally is the largest rally since the bear market began, a positive. Second, the NDX/NAZ look like they have done five waves up from the Christmas low, another positive. Third, the SPX/DOW look like they have done three waves up from the low, a negative so far. Fourth, the largest rebound for B waves, under similar conditions, in the past three decades has been 13%. The rally has already reached 12%, close to turning positive. Fifth, the maximum percentage rise in breath for a B wave has been 25%. Thus far breadth has risen 19%, a negative.
Since we already have two positives, a third would raise the probabilities in favor a new bull market. A fourth would increase those probabilities, and a fifth would almost assure them. Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots. Short term momentum ended the day with a negative divergence. Best to your Opex trading!
MEDIUM TERM: downtrend
LONG TERM: downtrend probable