The sharp rally off of the 11/26 low continued on Friday with another uptrending price bar forming on the daily cash S&P500 chart. The price pulse upward from 1406.10 continues. Although volume increased on Friday’s bar the price movement continued to decrease, forming what Bill Williams calls a “Squat” bar. He says (in the book Trading Chaos) “Virtually all moves end with a squat as the high/low bar plus or minus one bar of the same time period.” This would mean that a short-term high is being made here.
That shouldn’t come as a surprise when one looks at where we found resistance on Friday – right at the intermediate and long moving averages. These coincide with the strong chart resistance at the 1490 level. With the higher level time frame charts pointing to at least a retest (if not outright new highs) of the old high, the big move up from 11/26 may just be the first move in a new upwards moving Elliott pattern. If so a correction may now be due on the daily charts.
Elliott-wise I believe the odds favor the view that the low is in (11/26) but I can’t be 100% certain. And so I will go with the odds; looking for a place to get long the SPY on short-term weakness.
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