1/7/2014

So we had a decent 3 days in the red, which could very well have shaken out the bearish positions. The market pretty much opened and took off. 1840 was tested a few times, and the high for the day was 1840.10, but there was no decisive break above it.

The hourly shows an ascending triangle whose top is right at 1840, so hopefully Wednesday we see this level taken out to lock in some gains. Wednesday's low could be as low as 1831 in the early part of trading, but it would appear that the support increases by about 1 point every hour if it's to stay in the triangle. Momentum is pointing up, and RSI is ready to run.

I think things are bullish in the immediate term, and we'll see how the market treats 1850. Since I've switched my charts to candles, the daily looks like some sort of ladder bottom, or a morning star without the gaps.

The only major problem I see is that levels above 1850 in the coming months only seem plausible if we get above the giant monthly channel. The monthly chart without this channel - which I've placed below - still looks bearish, and it is probable that January will close red. To test the support in the monthly channel from 2011, we would either need to see 1725-1750 in the next couple months, or we bounce off 1800 in the spring.

Either way, I'm sort of expecting 1850 to be resistance before the spring, and will be surprised if there's a breakout. I think many would agree we need a correction, as this is getting a bit ridiculous.

S&P 500 Hourly Chart

S&P 500 Daily Chart

S&P 500 Monthly Chart