Today looks simply like the pause that refreshes after yesterday’s barn burner upside move in the sp500. Sometimes the best signals the market gives us come from tape action that does NOT occur as opposed to what actually happens during the day. What did not happen today was a significant ‘give back’ of yesterday’s substantial gains ( at least up until a couple hours before the close). Some of my best interpretations of market action in the past have come from what has NOT occurred as opposed to what actually does happen.
If we were to presume a more bearish evolution of the recent correction then today should have almost fully retraced yesterday’s price candlestick. That is the type of action that was seen at the April 2010 highs after we had strong upside reactionary price moves. The following day saw the market fully retrace them. But this is not happening now.
The Thanksgiving Long Trade appears to be going long this market at 3:59PM Eastern time today and then holding until the end of half day trading next Friday November 26, 2010.
The premise is that we have completed the recent violent downside correction and will now create the upside of the handle portion of this large cup and handle pattern in the sp500. In BestOnlineTrades view and as already mentioned in previous posts I view the possibility good that this handle formation is not going to be a one month affair. Instead I view better odds we will get new running legs sooner rather than later.
The strength in the SMH semiconductor index is notable today and is a possible good description of what I expect to see in some of the other major indices.
BestOnlineTrades continues to try to provide as much forward interpretation on these markets as possible. The longer term weekly and monthly charts continue to be in a bullish stance and if we can close in the sp500 near 1200 today then it will have created a weekly bullish reversal hammer going into next week.
We believe that there could be between 100 to 200 S&P points to the upside from the 1200 level, certainly more than enough turkey for everyone 🙂 .