So long to the potential small range day.
Without selling interest equity bulls enjoyed another strong performance.
But we now have a few "bearish" extremes that suggest that some type of a pullback may be due.
When I say pullback I don't mean yet that the EWP from the November lows is done.
The Risk on / Risk off SPX:TLT indicator is a bit stretched (Above the Bollinger Band) and with Stochastic negative divergence. But this indicator does not help in judging how much room to the upside is left for the SPX corrective rebound from the November lows.
I prefer to rely on the following Sentiment, Breadth and Momentum gauges:
Regarding Sentiment, the CPCE has dropped to extreme bullishness reading; hence the bulls' camp is now overcrowded. (The Risk/Reward of long position is rising).
For the immediate time frame we have:
Low eod print of TRIN = 0.48 and a high Tick = 831 which are suggesting a potential exhaustion move at yesterday's eod print.
SPX daily candlestick deep inside the upper Bollinger Band.
However the there is absence of negative divergence of the NYSE Adv-Dec Volume.
For the larger time frame:
Daily Stochastic with a new buy signal (Not in the overbought territory).
New higher high of the RSI = Without a negative divergence I cannot have any confidence of a feasible major ending move.
The "risk level" of at least a short-term top is rising, as the market should be approaching a bullish climax. Probably due to the seasonal effects, there will not be a trend reversal until the first week of January.
Lets no move on to SPX charts.
In the daily chart, that I have been showing, we can see that if bulls confirm that they also are able to reclaim the 0.786 retracement, the next resistance is located at the Trend Line Resistance # 2 = 1455 +/-.
So Above we have 1455+/- then nothing can stop bulls by revisiting the September high at 1474.
The immediate support is at 1434; Hence as long as price does not breach this area the short-term trend remains up (Even if it is overstretched).
The 2 scenarios that I have been suggesting: bearish wave (B) or bullish Ending Diagonal options (Break out above the September high scenarios) are both possible, with still no clear edge. (Until price will give clues when this up leg is finished).
Regarding the EWP from the November 16 low in my opinion the Triple Zig Zag count remains the top count.
Hence price is now unfolding the last wave 11.
There is no indication yet that the assumed wave 11 is over (As long as we don't see price action below 1438).
Bulls have not achieved yet the 1 x 1 extension target at 1451.87 (It is a theoretical target).
Yesterday I suggested on Twitter/StockTwits the idea of an Ending Diagonal:
If the current up leg (From the Dec 14 low) does not exceed above 1451.87 then the Ending Diagonal could pan out
Probably since there is now a clear disconnect between Gold and the EUR, going forward a bounce of Gold (it is oversold) will most likely switch the market into Risk OFF mode.
I will post an update of Gold before the end of the week.
Probably tomorrow I will not publish a daily technical follow up.