Week in Review

As at last week, the sentiment was pessimistic as the indexes start to fall, hitting a low on 19th Dec, at 1202. I gave a target near 1200 levels, which was at fib 61.8. In the postings sent last week, I told my readers that I remain confident for a rally this week and on Tuesday 20th Dec, markets gapped up 3%.

After wednesday, markets started going into a narrow range, moving a little higher and higher on light volume. A bearish wedge is forming.

Yesterday, I reviewed the price targets and gave alternative scenarios. Scenario 2 is out. If the markets do not fall below 1248 on Tuesday, then the price actions of yesterday will conclude that we are still in C wave of the wedge, and we have D & E to go. This also implies that there will be a spillover high on 27th Dec (markets are closed 26th).

23rd Dec is a cycle turn in my books and giving +-2 days, 27th Dec is acceptable. Since 1260 has been exceeded and if we are still in C wave, the targets will be raised to1270-1275. Also, 1270 is 0.618 extension of the rise from 1158 to 1267.

But If the markets start falling right away and goes below 1248, it is a warning that a top has already been in place at 1265.

I remain confident just like last week and I stick to my view that we are going into general weakness till the first week of Jan.

As volume is light, I expect markets to be either in a narrow range or start falling next week.





We formed a narrow range bear flag on the VIX hourly chart, so we could see a lower vix next Tuesday corresponding to a higher high on the SPX. Look at the MACD, it has crossed up and if Tuesday sees a lower VIX but with a higher MACD, there we have it, the recipe for a turn. Both the hourly and dailies would be on positive divergence.



Same analysis ties with USD's picture. This is a daily chart. MACD has crossed down, tying with a rise in markets on Tuesday, but as price is now on support so I wouldn't expect to see a big drop in USD. Its MACD should cross up soon.

Lastly, this is a season to be merry. I would like to express my gratitude for your support and I wish everyone a wonderful Christmas and have a great long weekend.

See you again next Tuesday.