S&P 500 Week of Dec 6th to Dec 10th Outlook
By LawrenceRecap of last week
First 2 days of the week happened to be the last 2 trading days for the month of November. On that last trading day of the month the market made a stand to close at the October close, effectively neutralized the strong bearish setup made in the beginning of the month to sell towards the red zone below 1150. Once December started, we get a new daily level gap up (a new 7th gap zone) that gap above the yellow zone at 1200 I warned about last week. The market never looked back and tagged November high on Friday close.
Next week outlook
Last week was a trend week that closed at the high, that means it is very likely we will see a higher high next week. The primary target area is 1250 (green zone) and that may take the whole December to get there as trading activities slow down in the holiday season.
If yellow zone at 1220s turns into resistance, the red zone at 1200 will likely be the target zone.
1199 is 50% retrace from last week.
We’ve just had a 54 point move. A pullback to the open gap at 1196.25 would make sense, because the final leg of a measured move (1196+54)would take us to, yes, 1250.
Let me clarify what I mean by the 1196 gap. That WAS a gap, and it was filled during last week’s rise. Now that it was filled, that is now logical support.
Halfway retrace from November = 1198
Halfway retrace from last week = 1199
One more thing: 1196.75 is the low of the massive gap up day that led to the 1177 gap on the ES.
Another reason why 1196 is logical support area.
The interesting thing is that should the gap right below 1200 get tested, it will likely fill 1/2 the gap only if we are going to see 1250 before year end.