Tuesday December 22, 2015
Key Developments :
- Inverse H&S target acquires 2040.32 target.
If you read last nights report, you knew EXACTLY what to do today. We can see from the chart that the morning gap up was sold at the resistance talked about yesterday, and never looked back once 2020, proved itself as support. If you were accumulating this morning and sold at your price target as I did, you not only had a plan, but you executed it perfectly. If you held into the 2042.15 gap fill, that is fine too. The morning session was a little choppy, which is to be expected when you have 3 swing highs (see last nights report) to deal with in any technical breakout, we just need to learn to deal with this and to stick to the PLAN!
So where do we go from here?
At this point in time there are a couple of things to consider.
1) The bullish double bottom cup/handle we talked about in the weekend journal has once again been saved. We have to now not only take out 2020, but also the cup low at 1990 to kill it off officially. So at least for the time being, that is the wind at the bulls back.
2) On the shorter time frame, we acquired a technical target and filled Friday’s a gap. To keep the market on bullish footing, it is best to see some consolidation here and potentially form a cup/handle targeting higher prices. I personally will not be trading until something develops be it bullish or bearish, and other than the daily pattern, there is little to go on.
The Bottom Line:
A major technical target has been acquired today, along with Friday’s gap filled. If we are going to go higher, we expect and would like to see some consolidation to form a cup/handle formation. We need the market to form it’s next pattern, bullish or bearish to help us have confidence in the next direction. We will give the bulls the benefit of the doubt for now as the double bottom cup/handle is currently out of the ICU. WATCH AND WAIT FOR THE MARKET TO GIVE US DIRECTION. This is a volatile non-trending tape with a flat 200DMA, so direction can change quickly. It is a much different tape than the one we had into the end of 2014. We must be patient and wait for things to develop and take what the market gives us, not try to invent trades. If we are patient, there will be money to be made soon enough.
Chart of the Day:
Watch ST to see if it can take out these support levels triggering a H&S top.