Friday’s closure seems to cancel all potential bearish combos that could be potentially complete during the week. There are some clouds on the horizon, but I am bullish until told otherwise.
Let’s explore the hypothesis from various angles.
SP500 (Candles charts)
November candle canceled any bearish mood in September and October.
The weekly is a normal continuation candle.
A strong bullish Maribozu on Friday canceled potential of a Spinning Top on Thursday.
I am bullish after exploring the candle structure.
While Technical indicators in general are positive, there are divergencies in MACD and Momentum that I identified on the Short Term chart. The next couple of days could bring clarity to that area. Overall, based on indicators, I am cautiously bullish.
PATTERNS (copy from the previous weekly update):
Rectangle and Triple Top
This section remains the same for a month at least.
“There are two classical patterns fighting each other right now – the Rectangle formation and the Triple Top. If price breaks through the top of the rectangle, it should move fairly fast the height of the rectangle to approximately 3900. If the price is rejected at the top of the rectangle, a Triple Top would be complete and the price is likely to fall the height of the rectangle to the 2900 area.”
I think that the rectangle wins.
In one of my previous write-ups I was talking about the possible mid-wave Pennant that I marked on both Short and Mid term charts. A measured move after this pennant would end about 3900 which is aligned with the move by a bigger rectangle pattern. Makes one think.
I have only the updated red count on my mid term chart as I think it is the most probable at this point (supported by candles and patterns). I tried to measure a potential move of wave 5 using the two sets of fibs. The Golden Section, that works very well on a longer-term charts, projects the top at 3876. The fibs off the March low say that 3804 will be at 3.0, 3929 – 3.272.
Based on various 4 points above, I view the area of 3900, which is about 5% from the current 3700, as a projected target for the next move.
These points are good, but I still have my doubts. When in doubt, call SmallCap. I decided to look at the big picture there and pulled my chart that I made on January 4, 2020 (!). The chart is still amazingly in play. At 1890.20, the SmallCap has entered the major area between 3.0 fibs off 1987 and 3.0 off 2002, respectively between 1844 and 1936. It has to advance only 2.4% to hit 3.0 off 2002. Will it stop there or advance further? I don’t know, but the level is worth noting.
I think that the next week will help to determine whether indices are close to top and I am bullish for the next week until proven otherwise.
(From past experience, every time I remove the immediate bearish counts from the charts something nasty happens. Hope this time will be different.)
Have a great weekend everyone!