Market top should resolve soon -- or wait until January

Price action and setup analysis

Stock index, chart, technical analysis Stock index, chart, technical analysis

If the market intends to top before Christmas… then it also needs to start declining from that hypothetical top. Before Christmas. Not that either is required before Christmas — a January top would not be inappropriate for this pattern. And that may be the case if the market isn’t topping soon.

Pattern points… (Setups and technicals)

Monday’s range wasn’t a surprise. Monday’s ranging was. A rally did not depend upon opening strongly, but recovering the overnight dip to 1411.00 earned some sort of rally.

Of course, buyers were rewarded by probing above Friday’s intraday high to 1421.00. That would have qualified as “some sort of rally,” if not for retracing entirely back to unchanged

Reversing — not just retracing the fresh high, but also reversing to new session lows — that would have been most surprising of all. At least that was avoided, keeping alive the bigger picture expectation to test 1424.00-1425.50.

What’s Next… (Outlook and opportunities)

Getting there is another matter. Monday afternoon’s timing windows all avoided signaling trending. At least the cash session settled in positive territory (the futures surge to 1420.50 only confirms the thinness of resistance). Tuesday morning’s open should be trending — and preferably trending upward — to avoid another couple of non-trending timing windows.

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

About the Author
Rod David

Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog http://IfThenSignals.com.

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