Week of December 25th, 2023

8 green weeks in a row for $SPX, low volume & short week ahead

Hi everyone! Merry Christmas! Happy Holidays!

This past week we got our 8th consecutive green week in a row in what has clearly been a lockout rally and kept anyone waiting on a dip sidelined or forced to FOMO in at the highs. It should be noted however that the bullish side is a bit overcrowded and chasing here is very risky. If long since earlier in the month, it’s just a matter of raising stops until a support fails. But if you are initiating a long position, this isn’t the place to do it.

Key for the next few weeks: BTD as long as supports hold, if support falls a short trade begins and the short trade does not end until a resistance is reclaimed. This means if you have been programmed to buy every single dip, and supports begin to fall, you need to pivot quickly or you will give back all your gains trying to buy every dip in the middle of a multi-day multi-support flush.

Last week I mentioned “Can try chase longs over 4734 to target 4742 and then attempt to take out the ATH. Be very tight with the stops and be prepared for fails.” The theme continues to be the same, the trend is long, and BTD continues to have better odds until a support fails. We are now only 40 points away from ATH.

Something I have mentioned time and time again is that in bullish trends bearish patterns tend to fail and in bearish trends bullish patterns tend to fail. This is why that bearish engulfing was quickly invalidated. Here we can see a rising wedge (bearish pattern) into prior ATH territory. I’ve marked a red line to signal a pivot/turning point next week. If we start to close below that red line, we may see the start of a larger 200pt sell.

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SPX Analysis:

Key Levels: 4734 & 4769
Extreme risk at current levels for new longs. Very high risk of sudden rug pull of multiple support levels (200pts+)

Bullish Trajectory: High risk for new longs as this breakout reaches its mature stages. If taking longs be prepared for a multi-day sell to come at some point suddenly and don’t get stuck buying every dip. Can try chase longs over 4756 to target 4769 and then 4794 and an attempt at the ATH at 4818. Be very tight with the stops and be prepared for fails.

Bear Trajectory: A break of 4733 likely leads to a retest of the FOMC breakout at 4655. If 4655 falls then this turns into a failed breakout and can continue down to 4607 and 4575. There is support here that was not there in the July breakout, however if this falls we can see retest of 4534 where I would expect some meaningful bounce to occur.

Summary:
Watch this red line as your pivot/turning point and be careful being long if below it.

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IWM 0.00%↑
IWM visiting this 200 level for the 4th time after a liquidity grab / failed breakdown it may have the juice this time. Watching this 190-193 zone if it holds on dips for a push into 203 and 212. Must see an S/R flip at 203.07 for the move to 212.83 and 216.83.

QQQ 0.00%↑
Fresh all-time highs on QQQ.

TLT 0.00%↑
Gap fill was completed, now we need to see a push through 100 for the move to 105.38. The red box must hold on any dips for our bottoming thesis to remain in tact.

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TRADE ALERTS:

For those of you not in the Discord (www.jr28trading.com) I highly encourage it as we cover a lot of the setups given here but we also alert LIVE trade ENTRIES and EXITS.

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Sentiment Check:

Comments:
We are now in extreme bullishness levels, so a big red flag for anyone new to the long side. I’ve noticed over time that the fear & greed indicator works when we visit an extreme and then leave it, that marks the turning point, however we can remain in “extreme” for some time before that happens. The AAII bullish count is now at a 1-year high, higher than JULY.

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Here is the economic calendar for next week:

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For this upcoming week I will be watching the following setups and levels: