Looks like the “WV” pattern worked out after all as the futures held the rising trendline to make the bottom point of the “A” and then rip up after the FOMC meeting toward that 2160 target. They’ve hit 2166.50 this morning so far and look like they want a double top or new all time high. Considering that we had a nasty drop on 9/9 to clear out a lot of the overbought conditions popping through the all time high should be easier this time around. But they are overextended today and should pullback in the afternoon session and erase some of this mornings’ gap up.
Support is at the higher rising trendline pointing to about 2162 by the close, then the horizontal trendline around 2156 where the market stalled out at last night afterhours and chopped sideways putting in a bull flag. Upside resistance… well, we are at it right now and banging hard on the door. This looks like some kind of 5th wave up to end the rally but it’s hard to know for sure as counting waves to forecast the future has rarely worked for me. There are just too many alternate counts I guess.
Anyway, what I think is happening right now is that all the bears’ stops are being hit… which when it’s finish leaves no more fuel for this rally. This is why I think we’ll drop back after this mornings’ exhaustion move tires out. I’m looking for a “topping tail” candle pattern on a daily close today. We are in a tough range here as that magically 2200 level is just within the bulls reach again and they could get it this time around. It’s just that this the month of September and near the end of it too… which is usually a bearish month. If the market was making a run for this 2200 level back in June or July I’d give it higher odds as those months are usually more bullish months.
Yesterday near the close of the day I said that there was high odds of down day today and a possibility of a gap up first. We’ll are getting the gap up but I have to second guess my call now for a red close. I think the best way to play this today is to let this rally exhaust itself and look for it to rollover and break the higher rising trendline pointing to around 2162 right now. If that happens later in the day then we might get our topping tail candle, which should lead to more downside on Friday.
For now I just want to give this market some time to figure out if it wants a new all time high, double top, or lower close before shorting it. I thought about it yesterday as I was expecting a down day today, but I decided to wait as I knew there was a possibility of a gap up like this first… then a pullback into the close. So again, this is a tough call here… I’d just sit on my hands and see where it stops today. We had a good run up yesterday as that “WV” pattern worked out great, so hopefully everyone made some money on that call. But today I might be getting this call wrong.