Today should be interesting. It is the only cycle trend day this week, which means that there are 70% odds that trading will be dominated by either buyers or sellers. That can mean a trend day but often won’t be a full trend day. That could very much go either way based on the closing setup on Friday, where the SPX close was at a test of rising wedge support. Bears have missed the opportunity so far to gap below wedge support at the open, and if we see a strong move up today then rising wedge resistance is currently in the 2115 area. Equally if rising wedge support breaks this morning this market looks ready to test the 2060 area next. SPX 60min chart:
If we do see a break of wedge support then I’d be looking for a test close to or at the 2010 area and we could see considerably lower. A high probability RSI5_NYMO sell signal fixed on Friday and that’s telling us that a retracement is close, even if it doesn’t start today, and that the retracement should be strong enough to at least make the 38.2% fib retracement of the wedge at 2010. SPX daily:
Today is the first trading day of a new month and that favors the bulls. My friend Cobra has the first day of the month up six times out of the last nine and this has been a weak year. If rising wedge support holds then bears may well be in for a long and disappointing day.
