11/25/2020
Yesterday’s Market brief I discussed the “warning signal” and over extensions on many charts and indicators. Today we are seeing some slight weakness (Most likely profit taking). Will this continue? I’m not to sure, but I do find it interesting that last night the US30 was up around $160 points among other indices being in the green and then we saw them sell off rather quickly.
Seasonality chart suggest we can see a sell off into the beginning of December followed by a sharp year end holiday rally.
Most of the monthly & weekly charts of the indices are running red hot in over extension territory, so a sharp aggressive pullback does seem likely in my opinion. But given the mass euphoria, it’s hard to know how long this rally can last.
Let’s look at some charts…
Didn’t quite fill the gap from the other day, however we did find some strength at the lower trendline of this rising wedge pattern. Nothing but gaps below us.
2 hour Timeframe for the S&P 500 is trading inside a channel currently located at the upper resistance. Also, can be argued that this is an ascending triangle or even a bull flag. Both the MACD and the RSI have negative divergences that have not yet been confirmed.
Dow broke above 30k setting a new historic record. the price action is currently below the previous breakout point. The previous 2 hour candle is known as a hammer candle, and given its context, its very possible that we bounce from this point. However, if we get below $29800 its more likely to fill the gap below us. Also need to mention the negative divergences on both the MACD and RSI
Ascending Triangle building at the upper range of the bollinger bands. Todays gap has been filled and is acting as a support thus far.
Conclusion: Market is still in control by the bulls. The price action, mixed in with indicators, as well as a seasonality chart do suggest we can be in for a very “unexpected” sharp selloff. If that does occur, I plan on being positioned for it as well as being ready to go long at various areas of support.
HOPE EVERYONE HAS A SAFE AND RELAXING THANKSGIVING #GOBBLEGOBBLE.