Market momentum stalled even as an ultra dovish FED tried to comfort worried bulls.
BUT it was the acrimonious outcome of the Shutdown meeting that scared the market and the rather tepid release from China on the Trade War talks disappointed many who bought the favorable report from the US participants. Markets were reacting to this news quite actively so I decided to trade NQ in the night session.
Still, this pullback may be just a minor retracement to SPX 2520/25 zone unless there is more bad news during the next two days.
Most likely, the Shutdown issue will be resolved with a face-saving deal from both sides and the Trade war talks will continue soon but the really difficult issue for the bulls will be the Q4 earnings report PLUS revisions, warnings etc during the next few weeks.
- The S&P continues to march toward, what we believe, is the next major area of resistance at 2640ish, which is the zip code where the 50-day and next key Fibo live
- The market will soon be tested with the Q4 earnings reports, which will be interesting, to say the least, with all the foreign exposure in S&P500 earnings
- Doji candlesticks have signaled coming downdrafts since the October top, the closest signal we have found to ringing a bell at the top
- We are becoming a bit more cautious as the daily candlesticks over the past few days are beginning to resemble Dojis. Watch this space.
- If the S&P generates a nice formed daily Doji, we will get shorty for a trade
- The S&P needs to hold 2573.61, the key Fibo level du