WTF Chart of the Day: Post December Seasonal Selloff Reversal

Almost everyone thinks that this is an impossible reversal. Is it really that improbable?

1. Orange up arrow is 100% downside expansion of Friday range, high probability reversal price level.

2. Trend sell week last week implies consolidation play around the weekly close at 1769. Remember it is the 4 pm Eastern Time close of the stock market that matters, not the close of the index future itself.

3. Red rectangles highlight equal distance around that Friday close computed from the fact that we already have the flush completed and that the stock market was going to open above Friday high.

4. Red down arrow marks the exhaustion of the up move at the right price level – equal distance from Friday close based on the flush low, 30 points rally with no pullback in between, etc.

It is not a surprise move at all.

Share