Over the last months the indices have been waiting for brief declines of no more than few days to reach new highs. On Thursday the SP500 was 1% sold off but on Friday we surprisingly or not , recovered a bit and hidden positive divergence has been taken place and can be seen in NASDAQ 100 and SP500. Although we are at the supply zone in SP500 - watch for more upside bias in the next week. Looks like the bulls want to push it one more time higher.
Friday's close outcome an exhaustion pattern. The pattern occurs when the open of the current day is above the high of yesterday. Means small trades/investors who are trading at the open , are anxious to place new longs or cover shorts. They are in panic.
The big guys identifying these behaviour and taking advantage of it by selling.
In the below SP500 Cash chart, you can see what happened few days after the pattern occurred. (The red dot above the price).
I hope you took what the market gave us two days ago.
The bears had no power nor the will to break down 1480 level at SP500 . So watch this 1480 carefully.
Looks like the SP500 wish to reach a new highs in the coming days although there is something fishy in its handle.
In conclusion , watch for a choppy market with an upside bias.
Well , it sure looks like the rally is over for the short term.
Our Analysis from Friday is on the right way.
Please note that you should consider take what the market is gives us. i.e. If you short with profit although the sentiment is still bearish , don't let the market swipe your revenue. You can place stop loss above the high of yesterday.
Take a look at the NDX chart below. Whenever the market crossed and touched the Volume blue line at the bottom of the chart , we got a point reversal. This phenomenon suggests swapping hands between bears and bulls , and therefore the very high volume - way above the average.
