Do or Die…
Do or die here in the $NDX. We have a nice break down, but is it the start of the next move lower, or is just the [X] wave in an [ABC] correction? I am sure that many of you can guess, but I favor the former over the latter and here is why.
- Today’s breadth was fairly negative, with most indexes registering 9:1.
- We were rejected from strong overhead resistance. This includes a confluence of trendlines and horizontal levels, and also included a RL at some point.
- A = C equality in the $NDX. The move from the low on 11/21 to the high on 11/26 is almost equal (above 90%) to the move up from EITHER 12/2 or 12/5 to the 12/9 high.
- I can count five waves up from the 12/2 low to the 12/9 high.
- The MACD is still pointing down, and histogram is making a lower low.
I have a few more reasons, but I have to keep something to myself. 🙂 The reasons why I would believe that we get a final push higher, towards 1300 in $NDX are as follows:
- We have an A = C equality in the moves down on the 9th and today’s down move.
- One could argue that the move up from 12/5 would look best with one more push higher, and the move up from the 12/2 low (should that be the acting bottom) would DEFINITELY look best with one push higher.
- We stalled at a RL today which also corresponds with an important closing trendline. While we can expect some recognition from such levels, but a move in either direction could be tell.
- We got a close out side the 2.0BB. Granted, this is the tightest the BBs have squeezed in QUITE some time, we still must respect an hourly close back inside the 2.0.
The chart that illustrates this is kinda busy, so follow along. Teal lines are hourly closing trendlines, while the orange lines are are high/low trendlines. The purple lines are important horizontal resistance levels. The blue horizontal line is the most logical horizontal target should we get a final push higher.
XLF and XHB have performed pretty much as expected. XLF is steadily chugging lower, and XHB has broken the rising wedge we discussed on Monday. Both have broken bullish resistance, and should be continuing lower. XHB…
The title says do or die, because the bearish case has a chance to make a break lower. If it can breach this important confluence of resistance, we can start by looking for the lower purple line around 1185. If this decline was just a gap filling exercise and the trendlines hold, then we should be looking for the 1300 range. As I write, futures are down -140 in /YM, -23.25 in /NQ and -19.5 in /ES. With the most recent break and reversal staring us in the face, and knowing that the futures have been less than useful in their after-hours antics, I am looking forward to the last trading day of the week before the last expiry of the year, which is also a fed week…
WIth that, I am going to set the short term indicator to up-down, allowing for another nominal push higher before we get our decline. I will set the medium term to down, expecting that within a week we will see lower prices, if not sooner. And the long term will be down, as I still believe momentum is with the downside.