MARKET POINTS: by Woody Dorsey
- The 11/3 High remains as a cogent Resistance level. The dramatic Bottom on the 3% and 1% Sentiments near 11/16 remains cogent Support. Ranges within Ranges continue as expected. Weakness was clearly preferred into the long anticipated 12/7-10 zone. It is happening but this is not the time to get or to press shorts.
MARKET TIMING: Yesterdays’ Profile for weakness into 12/7-10 is materializing. I want to see how we close today and what the downside is on 12/10. Prefer Recoveries after that.
TIMING SUMMARY: Stocks are in a weak zone. Profile prefer upside from say 12/14-12/24ish.
SENTIMENT INTERPRETATION: The DORSEY Market Sentiment extremes of 1% and 3% occurred @ the 2025ish level. That remains a Key level. The Reversal from the 93% Bullish on 12/2 was defining. The DORSEY Intermediate Market Sentiment has failed from its Recovery and is retreating.
SENTIMENT SUMMARY: Sentiment hit an overt extreme on the the 3% and 1% Readings and another extreme on the 93% Reading. Thus these levels become cogent indicants of the Range which is now being potentially probed on the downside.
OVERALL MARKET SUMMARY: There is no proof yet that anything other than Range Trading is occurring. But, it is finally exciting. The 12/7 & 12/10 dates were due to be negative. I advised last week: “There is no reason to buy this break or to be friendly towards the market.” Now, don’t press shorts here. Next week appears to be an Xmas Recovery.
TECHNICAL VIEW by Gary Dean: Last Thursday I mentioned a test of 2045 as being the area to expect a bounce. It made it down to 2041 (close enough) and then we witnessed a massive short squeeze on Friday. That move took the SPX right up into my resistance area between 2080-2088 (2091 high-close enough) The battle of the 78% line! Since the Thursday lows, the SPX has been playing 78% fib ping pong. The short covering rally Friday took the SPX up to the 78% resistance line and this morning, the lows hit the 78% support line. If it continues, typically it ends up being a consolidation triangle and whatever end of the triangle it breaks-wins the battle.
Now the triangle pattern is NOT certain to form and at this point-as I type, the risk seems to be on the bulls-that the SPX just continues lower. The momentum indicators on the 15 and 60 minute charts still have plenty of room to move lower and the SPX is already at the 78% support level. If that gets taken out, I wouldn’t be surprised to see a panic move lower to test the Thursday lows. What also make sense-is Friday’s short covering rally was simply a wave B up and we are now in the middle of a wave C down. That would imply Thursday’s lows will be taken out and a test of 2020 is coming.
The first task at hand for the bears is to break 2053 and then 2041-obviously. But as I mentioned earlier-momentum on the short term charts have room to move lower. There are bullish divergences on the 15 minute charts-so if the bulls do hold, it wouldn’t be that odd. If they continue the 78% rule-then we could see 2085 again. Tough call and we have already had a nice drop. The preferred road map would be lower than Thursday’s lows-as that would set up some technical buy signals on the 60 minute charts.
- Resistance Levels-2062-2073-outsider 2085
- Support Levels: 2053-2041 outsider 2020
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