S&P 500 Dec 20th to Dec 24th Outlook

By Lawrence

Recap of Last Week

Stalled from weekly open range established on Monday, failed to hold prior week high on 2nd try, leads to a quick drop towards prior week midpoint (yellow zone). Bounced from there and closed within Monday’s range.

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Next Week Outlook

A bear trap is now in place between yellow zone and red zone. Should ES drop into this area and bounce off quickly, the year end target of 1260 area will likely be tagged quickly. It is very similar to the bull trap as seen in GBPUSD last week (see the weekly outlook here). If the red zone (previous week bottom + prior week midpoint + approx. Nov. month high) failed to support the market there, a short term top is in, and we can look for selloff back down to the 7th unfilled gap below early next year.

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Comments
  • smilingsynic December 19, 2010 at 8:08 pm

    Last week’s low 1228.75
    Highest open gap below 1198.75

    1228.75-1198.75= 30

    Upside target =1228.75 + 30= 1258.75

    ??

    Something to consider.

  • Lawrence Chan December 19, 2010 at 10:34 pm

    That’s the red zone to green zone range.
    One of the reasons for the red and yellow zone range to be called bear trap.

  • Lawrence Chan December 19, 2010 at 10:37 pm

    The last 2 weeks of the year seldom moves smoothly. Gaps are expected every trading day in ES and currencies will be more continuous during this period.

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