Using the 3x Leveraged long ETF, SPXL for form, we see that gap fill of the January 4th gap-down-open and the 76.4% retrace coincide perfectly at $83. In addition we see a triangle forming based on important trend lines for this uptrend, which all 3 come together exactly at the same level: $83. Coincidence? This reminds us of the EDT that formed late October 2015. Trading towards this level will likely be a stutter-step and lots of confusion on the way up. Cont’d below.
Given how messed up the detailed charts look like (1 min chart shown below) -we’re open to anybody’s suggestions on as how to count the past 2 days- it fits with the possible and likely pattern we see developing on the daily time frame: overlapping. Cont’t below.
In addition, market breadth (McClellan Oscillator for the S&P500 is shown: SPXMO, shown) is starting to slowly deteriorate, with less and less stocks participating in the uptrend. It’s still positive so still more stocks are advancing than declining, which helps indices move up, but it’s getting less and less. Also this is comparable with the later part of the October 2015 rally (see red boxes). Cont’d below.
The fact that the Summation Index of the SPXMO has now reached overbought territory per the RSI14 only seen as high (>93) three times prior in the past 10 years suggests (red lines) also suggest the upside is running into resistance. Or in other terms; upside potential is much better when the SPXSI’s RSI14 is oversold, not insanely overbought.
As you notice, Intelligent Investing tracks many lines of evidence to determine the market’s next big move, Elliot Wave, S/R, TIs and TAs are several of them. Holistic objective analysis allows us to be on the right side of the market more often than not, without any preconceived notion or opinion. We use just the facts. Just like we did here! Do you want to be on the right side too? Of course! Then please join us here.