Over the last four weeks, since SPX broke back below the 5 DMA after the (all time longest) run over it from the 1820 low, I’ve been using the stats from the largest previous runs to call the likely moves afterwards. We are almost at the end of those stats now, with the last part being to make a new high. That’s already been done on globex overnight but needs to be done in regular trading hours as well.
After that’s done I’d mention that the shortest run over the 5 DMA from a significant low this year was eight days, and we are currently on day five. By day eight I’d expect the 5 DMA to be well over 2060. SPX daily 5 DMA chart:
I’m doubtful about managing any significant retracement in this holiday tape, but just in case I have sketched in possible support trendlines from the lows and would mention that I have possible rising channel support and the daily middle band now in the 2050 area. That’s not a short I’ll be taking but in the unlikely event SPX tests that support I’d be taking a substantial long there. SPX 5min chart:
This tape is low volume and tilted to the upside. If you aren’t one of the large numbers of traders who have sensibly taken this week off then I’d suggest buying the morning dip and catching up with paperwork in the afternoons today, tomorrow and Friday. The market will be closed tomorrow afternoon but it remains to be seen whether that makes watching this tape more or less interesting than it will be today or on Friday.
