1) yellow line is trendline from lows in feb/mar 2018 (neckline of 2018 head and shoulders pattern) Notice that we closed right ON TOP of it Friday.
2) Large downward channel (hypothetical) drawn using daily closes from the lows and median line using Nov high reversal
Notice the convergence of lines at 2695 on Tuesday from:
1) The upper line of the current rising wedge (cyan)
2) The median line of the current rising channel (red dotted)
3) The upper line of the current large downward channel (purple, hypothetical)
4) The trendline from highs on Oct 3 to Dec 3 (white)
Consecutive closes (because one day closes above trend are trappy IMO) above 2690 would pretty much invalidate any short term bear case for the next several weeks and take us to the 2800s.
I don't think this is likely happen for several reasons:
1) The whole pattern of Powell pumping us past the median line of the large downward channel, followed by trade war news to pump a high was already done in Dec. Just feels like it's on a greater scale this time around.
2) That gap at 2650 was completely passed over (again) as a result of 2 days worth of unsubstantiated news... Feels like some kind of consolidation here is needed before it moves higher.
3) AMZN is one of the stocks I use as a bellwether and I noticed some significant intraday price divergence from the S&P on Friday. MFI on AMZN on the 4hr chart also shows big money has exiting their positions for almost 2 wks. The noticed the same intraday divergence in the opposite direction during the xmas eve lows when the S&P closed at its daily low while AMZN painted a doji for the day.
4) Breaking up out of a rising wedge (cyan line) just technically seems like an unsustainable way to rally off a bottom, especially if we're gapping and running off unsubstantiated "trade news"...
Having said all that, I think we'll have a pretty good idea of how Tuesday will go when GDP numbers come out from China on Monday. If the're bad I think it's enough reason to snap the market back. (Probably all the way to 2600) If they are on par or better, the market will try and retest 2695. As we've seen during this rally, if it slowly consolidates below the resistance on low volume it will probably break it.
Either way, I think a pull back here means we'll revisit the median line of the large downward channel in the next several months and retest the Dec lows.
trade sanely friends.
2) Large downward channel (hypothetical) drawn using daily closes from the lows and median line using Nov high reversal
Notice the convergence of lines at 2695 on Tuesday from:
1) The upper line of the current rising wedge (cyan)
2) The median line of the current rising channel (red dotted)
3) The upper line of the current large downward channel (purple, hypothetical)
4) The trendline from highs on Oct 3 to Dec 3 (white)
Consecutive closes (because one day closes above trend are trappy IMO) above 2690 would pretty much invalidate any short term bear case for the next several weeks and take us to the 2800s.
I don't think this is likely happen for several reasons:
1) The whole pattern of Powell pumping us past the median line of the large downward channel, followed by trade war news to pump a high was already done in Dec. Just feels like it's on a greater scale this time around.
2) That gap at 2650 was completely passed over (again) as a result of 2 days worth of unsubstantiated news... Feels like some kind of consolidation here is needed before it moves higher.
3) AMZN is one of the stocks I use as a bellwether and I noticed some significant intraday price divergence from the S&P on Friday. MFI on AMZN on the 4hr chart also shows big money has exiting their positions for almost 2 wks. The noticed the same intraday divergence in the opposite direction during the xmas eve lows when the S&P closed at its daily low while AMZN painted a doji for the day.
4) Breaking up out of a rising wedge (cyan line) just technically seems like an unsustainable way to rally off a bottom, especially if we're gapping and running off unsubstantiated "trade news"...
Having said all that, I think we'll have a pretty good idea of how Tuesday will go when GDP numbers come out from China on Monday. If the're bad I think it's enough reason to snap the market back. (Probably all the way to 2600) If they are on par or better, the market will try and retest 2695. As we've seen during this rally, if it slowly consolidates below the resistance on low volume it will probably break it.
Either way, I think a pull back here means we'll revisit the median line of the large downward channel in the next several months and retest the Dec lows.
trade sanely friends.
