Market Analysis and Trades for 12/19
Box is Box, as Ugly a Box as it May Be
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The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. It can be found here Market Analysis for the Week of 12/14
Yesterday we spotted some signs of “forced” selling which can often be a (at least temporary) bottoming signal. This, combined with the spike down (see the starter kit if unfamiliar with spikes and how they are traded) into the close set sellers up for some punishment should they fail to sustain below yesterday’s spike (base and low).
The spike base on NQ was 24922 and we note twice sellers failed to gain any traction below it and certainly not to yesterday’s low.
ES very briefly traded below the spike (inclusive of yesterday’s low) only to produce a look below and fail (LBAF) which can be even stronger than just holding a prior day low.
While I had speculated that this gap up would be more likely to be sustained, reacting is more important than predicting. Today’s morning update (which is shared here via chat each morning):
The key level to hold was ES 6809.5-6812.5 and low of day was 6811.75. This level should be carried forward into tomorrow as being crucial.
NQ never really threatened its “must hold” are but this too can be carried forward into tomorrow:
The last 3 days have set up a very peculiar pattern on both indices which makes tomorrow (and the weekly close) rather critical. The BOJ meeting is tonight. There has been a lot of talk about the potential implications. The talk is valid, but the decision has been widely telegraphed so perhaps the market is prepared for it. Regardless, we’ll be prepared to trade both sides as usual.
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