Markets closed a bit higher as expected. The DOW Jones made new highs and I expect us to see 12k or make a touch of it before a big major sell off in dow. The SPX is somewhere between and lagging a bit , and especially the same with Russels, which is very very weak. Last week we saw a -5% decline in Russell2000 and yesterday it only managed to bounce a few points. There is a possibility we make it to 50% fib retracement which is at 790-792 level. Until then the short term trend is down and I remain heavy in short. This is still a topping process and you can really see how choppy markets is. I expects markets to be in this area , until FOMC this week and after there I think we will get a major sell off. I still believe 1180-1220 is a good support level and I would love to see 1180, but there is also a possibility that we will go all the way below 1000 SPX.
The monthly chart of SPX made a bearish harami which we made after a big run up in stocks, that is very bearish. The QQQQ weekly chart made a bearish engulfing pattern and the US Dollar had its pullback from its lows in november. Now the dollar is making a higher low which could be seen as a wave 2 down before a sharp wave 3 up in the dollar. On 30 min and 60 min chart we also have a bullish divergence in the dollar indicating a major rally is underway...
But again - until the Russels cant manage to breakout above 790-792 then the short term trend is down and no need to fight against it. Time will tell...
Have a nice day
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