We just witnessed a furious bear market rally in 16 trading days. The DOW rallied 14% in 16 trading days but it failed to produce a weekly reversal signal in the maximum allowed time length of 3 weeks against the December low. The weekly reversal signal is needed to enable the market to continue to move up from here.
The market staged an impressive 10.71% rally in the last 10 trading days. It took 65 trading days to decline 20.21% from the September top to the December low. The S&P 500 December price low was right at the 200-week moving average, meaning the price was at the maximum pain level for the long term bulls.
The S&P 500 violated the February 2018 intradeday low on Friday 01/04/2019. It has the entered the resistance zone at 2532-2600. From the way how it bounced from the Christmas Eve low we believe it has potential to go a slightly higher than the lower end of the resistance zone of 2532.
All three indices closed at year end below the yearly pivot range, indicating a weak position entering 2019. Pivot range is calculated based on the high, low and close of a trading period. The pivot range identifies an area that is called the meat of the market where the market is likely to find support,
We are waiting for the year-end closing data. So the weekly blog will be out on Monday 12/31/2018. We will be focusing on the forecast of 2019 based on how the year 2018 is closed.
Happy New Year!
