Sometimes you just gotta believe ...! The ChartsEdge maps for today pointed down and that worked - maybe too well, because the drop was so swift that by late morning I was tweeting about Fibonacci support levels in case this was a wave 2 pullback of some degree. Third waves are where you want to be with the trend, not fighting it. Turns out that Fib level for SPX also corresponded with ES gap fill, 34-hour ema, and other methods - plus there was the high TRIN yesterday, and the hourly chart positive divergence. Is there really a third wave up ahead, producing a huge Santa rally next week? I don't really know, but I can believe at least the indicators which said to close off trading shorts and step in from the long side. That spike at end of day helped bolster belief of course ... Now we've just got to enjoy the weekend, and a little analysis too. But there are holiday matters to attend, with family and friends - so allow time for that!
Looking at the BKX, it didn't poke under $41.42 yet so maybe it can bounce some next week, along with perhaps a wave 2 pullback in the dollar and inverse in euro and yen. It does seem that some markets are starting to march to their own drummers. And we'll also have to figure out whether the broad equities indices will target great new highs, or just manage something like SPX 1122.
The Baltic Dry Index indicator on the SPX chart below is dipping again, so we'll sip from the punch bowl but will avoid going in too deep before Monday just to help avoid getting soaked! Well, it's always good to keep plenty of cash, and daytraders would close out positions by end of day anyway. For swings - at this point, there's no reason to see a trend reversal pointing downward yet, so the rally must continue to be respected. We may think there'll be weakness areound the corner, but the corner hasn't manifested yet.
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