S&P 500 Jan 17th to 21th Outlook
Recap of Last Week
Prior week was a tight range week going nowhere that points to potential breakout with target expansion equals to the week’s range. That is what we got last week. Once the gap and go happened on Wednesday, all signs of selloff are there to trap the shorts only. Closed at high of the week.
Next Week Outlook
Last year closed at the high of its range. Statistically, that gives us a bias of 2% to 3% rally in Jan before S&P will stall. This statistics is now fulfilled. Thus it will not be a good time to go long or short beyond daytrading.
For the market to signal an end of its weekly based rally, we need a break of previous week midpoint (red zone) and close the week well into the range of first week of the year. If the red zone acts as support, the previous week high will be retested and very likely 50% upside expansion target (green zone) will be tagged.
Pay attention to the Tick16 long term and short term lines. Both are very close to the neutral zone, telling us that the market is not overbought nor oversold. Thus, on a long term basis, there is no need to bet where the market is heading until after we get better odds from the breadth readings.