Mixed Picture on Final Trading Day of 2021

Bullish factors on 12/30/21

The S&P 500 (SPX) has still not reached the major Fibonacci resistance zone 4840 to 4890.  Fibonacci points act as magnets then resistors.  Markets are usually pulled to Fibonacci points. Failure to reach  the zone opens the door for  continuation of the rally into the first week of 2022.  

Another bullish factor – both the SPX and Dow Jones Industrial Average (DJI) made new all-time highs, the Nasdaq Composite has yet to exceed its all-time high.   If only one of the three main US stock indices  had  made a new all-time  high it would be a potential bearish momentum divergence. 

Bearish factors on 12/30/21

While both the SPX and DJI made new all-time highs, they also went below their respective prior day lows and ended the trading day only slightly above the lows of the day.  This type of action after making  a new high usually signals  the beginning of at least a short-term down trend.

The daily SPX chart courtesy of Trading View illustrates bearish Stochastic signals.

Daily Stochastic had a small bearish divergence and a bearish line cross.

There are no guaranties  in  any market, they can change  trend at any point.  Its possible the SPX and DJI made major tops on 12/30/21.  If so we need to see how fast and how deep the bears  can move down the US stock market.

Until we have more evidence there’s too much risk to establish either a long or short position. The evidence could come in the first week of trading 2022.

To all have a happy and prosperous New Year!

Mark   

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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