As mentioned on Dec 07, we got our gap filled on ES at 1252.50. Now do we race up to new highs from here ? Purely from a e-wave perspective we never got a wave C (clean 5 waves). So the downside appears incomplete at this point.
SPX appears to be squeezed in a possible bearish diamond formation. SPX 1250 is the key now. Is 1250 gets taken out, the next minor support is in the 1241 area and major support around the 1230 area. My expectation is for a test of the key 1230 area, get everyone sufficiently beared up and then take off to the upside for the year-end rally.
From a momentum perspective, the CCI(14) has broken below the zero line. The Full Stoch has rolled over, suggesting there's more work on the downside. But given the size of the decline relative to the thrust out of these oscillators suggests that this is not the beginning of the next major leg down, instead a correction in the uptrend.
For now the daily and the hourly trend are down. Go with it. Shorting the bounces on the intraday charts would be the theme for the next few days, until the hourly turns up.
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