Here is a screenshot of the US stock market portion of the NFTRH 532 Wrap Up…
The holiday bounce played out to a degree but even considering this morning’s drop in pre-market (Dow & SPX down 1.45% and NDX down 2.22%) the bounce has neither reached optimum upside target nor been broken and negated.
Here is the 15 min. chart from #532 showing that the subsequent action on Monday gapped SPX up and then took it mostly sideways for the rest of the day. It closed above the short-term trend line we had laid out for it last week. The pink dot shows the point that SPX would open (around 2470) if pre-market follows through to today’s open.
Here is a screenshot of #532’s view on this…
So SPX is threatening the “nice and comfy” short-term trend line but the bounce could labor on unless it makes a lower low below 2400.
Understand that these short-term ‘day trader’ charts can distort views from our normal daily charts and make things seem overly dramatic and it is not my intention to inject drama into the discussion. So the bottom line is that the bounce potential would still be in effect as long as SPX does not lose 2400. Volatility was always going to be part of the discussion.
For more perspective, here is the daily chart showing the short-term support and key bounce resistance.
Bottom Line
- If SPX holds here and continues to ‘V’ rally toward 2600 the view would become bearish until such time that 2600 to 2650 would be taken out and held.
- If SPX drops below the 2470 area S/T support we might prepare for a decline to 2400.
- At that point the rally could fail or add a new twist, which would be a test of the lows and a more sustainable ‘W’ low than the ‘V’ scenario.
- So those not wanting to participate in bottom testing (at best) or a resumption of the bear leg (target 2100-2200) would want to respect the 2470 area support.
- As of now, including the pre-market drop, it’s “V bounce intact”.
