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January 4th, 2021: SP-500 Chart Update

Posted by pugsma on January 4, 2021

4:55 pm EST: The SP-500 price gapped from 3757 to 3764, quickly hit a new all-time high at 3770, then dropped steadily to the days low at 3663 and rallied to close at 3701.

Market Technical Notes: 

  1. NYMO: The NYMO closed down near -25.  The NYMO has not closed back above the zero line after closing below -20 at -31 last Wed Dec 23rd. Thus the NYMO has failed to clear the “crash zone” of -20 to zero. This is sign of weak market breadth and “could” lead to a significant SP500 correction, if the NYMO can’t close above zero soon. A NYMO close above the zero line will signal the next sustained wave up.
  2. VIX: The VIX closed up +18.6% at 26.97.  Note, the VIX trend has been higher since early December as the SP500 price rose. This is positive divergence on the VIX wrt to the SP500 and is a negative for the SP500. Need the VIX to break below 20 to confirm a melt-up SP500 scenario.
  3. Chart Pattern:  None.
  4. NYSE A-D Line Cumulative: The A-D line cumulative closed at a new all-time high with the SP500 closing at a new high of 3756 on Dec 31st. Thus, no negative divergence.  There likely wont be a significant top in the SP-500 without a negative divergence on the A-D line vs the SP-500 price and it this could now be developing.

The primary (white/green) wave count is that the minor 3 or major [5]-P1-C3 wave up is underway to a target at major [5]=[1] 3972. Minor 3 should target 3916, where minor 3 =2.0*minor 1. Wave minute (1) of minor 3 completed at 3646 and wave minute (2) at 3512. Wave minute (3) up competed at 3770, where (3)=0.62(1) target at 3767.  The minute (4) wave low was at 3663, just below the 38% Fib at 3672. The minute (5) of minor 3 up to new all-time highs should be underway  Note: The primary (white/green) count as labeled remains valid for minute (4) above the minute (1) high at 3646.

The alternate (blue) wave slight less likely outcome is more intermediate-term bullish than the primary (white/green) count and is that the the major [5] wave will extend to at least 1.62*[1] = 4445. In this scenario, this first wave up from the major [4] low at 3234 to 3770 is only a minor 1 wave as a leading diagonal (max 3833). The minor 2 correction is underway and should drop to a 38%/50% Fib retrace at 3566 to 3502 into mid-January. From there, the minor 3 = 1.62*minor 1 target is at 4434 into late year 2021.

The must less likely alternate (red) wave count scenario is major [5]-P1-C1 could have ended at 3770, where minor 5=0.62*minor as an ending diagonal (max 3833). From the P1 top, there should then be a significant P2 correction to at least a 38%/50% Fib retrace at 3170/2981. Note: It will take a break below the 3501 pivot to make this alternate (red) wave count more likely and a break below 3234 to confirm it.

SP-500 15-min chart:

SP500 Technical Analysis

SP-500 60-min chart:

SP500 Technical Analysis

SP-500 4-hr chart:

SP500 Technical Analysis

SP-500 daily chart:

SP500 Technical Analysis

17 Responses to “January 4th, 2021: SP-500 Chart Update”

  1. MS53 said

    Beautiful !!!

  2. pugsma said

    SP500, 3689 is an interesting level to watch on the close for Tuesday Jan 5th as it was the starting point 6 trading days ago on Dec 23rd close to begin the “Santa Rally” 7 day period.

    Years that successfully complete a positive Santa Rally 7-day period are extremely bullish overall.

  3. pugsma said

    Alt(blue) count minute (b) wave targets:
    50% Fib is 3717
    62% Fib is 3729
    78% Fib is 3746
    88% Fib is 3757

  4. pugsma said

    It’s simple now:

    A break above 3770 confirms the primary (white/green) count.

    A break below 3663 (then 3646) confirms the alternate (blue) count.

    You can set your short or long Short-term trading stops at or near this levels.

  5. pugsma said

    A quick review of Twitter shows about 10 bearish comment to 1 bullish. Even Uber bulls calling for a -10% drop. Many short.

    I wonder what actually happens…

  6. hmeda said

    Yesterday’s mini flashcrash very similar in symmetry to Dec. 20th. It rose 9 straight days to an all time high after that correction.

  7. pugsma said

    Remember a close above 3689 today is a successful 7-day trading period Santa Rally, which is bullish for the a higher high that 3770 in a January and more importantly a bullish year end 2021 target above 4000.

  8. pugsma said

    Also importantly the NYMO is attempting to close above the zero, which is very bullish for future SP500 short-term price gains.

    And the VIX, which closed above its upper BB yesterday, is attempting to close below it and confirm a VIX sell, SP500 buy signal.

  9. Denali92 said

    HAPPY NEW YEAR!

    Market stats are market stats and Cobra’s one on the BEARISH Engulfing candlestick being next day bullish is definitely one of the best right now, as seen by today – like in most instances, it works 70+% of the time.

    One stat that a number of blogs highlighted in October that I found amazing that is still working well is the one on DOWN Days followed by UP days!
    • It was noted that in September that the Down Days followed by UP days Stat was above 70% for the NDX which was a new high over a 252 day period.
    • Even in most bullish periods since 2006, the stat only got as high as the mid 60%, so the DIP buying right now is even stronger than has been seen in 2017-2018 and other periods of this bull market.

    While the BEARS hate this dip buying, it is what the market is doing and needs to be respected while it is occurring.

    I ran a smilar stat for the RUT / IWM at the end of the year and it is at 70% for Q4. (also, only 37% of the days in Q4 were down days in the RUT / IWM – compared to about 47% normally) Plus other than the last week of October, EVERY significant down day in the RUT / IWM has been followed by an UP day – many quite substantial.

    The markets are back to being PERSISTENT just like in the April – August time frame, though with a slightly different character. For now, I am thinking that this Down Day followed by Up day stat may be one of the keys to highlighting a potential change in market character. Yesterday’s down day was a slight surprise based on the first day of the year trading history, but until the market’s character changes all the BEAR Porn will just be that BEAR Porn (as highlighted by the 10 to 1 BEAR vs BULL comments). It also means that most historical patterns or turning points that might produce tops or pullbacks of some sort will not occur or will be super mild.

    I am not expecting a change in character any time soon….. Generally, the earliest time in January for a potential top is post opex / post MLK. It does not happen all the time, but it is frequent enough that I will highlight it some time next week.

    For now, the trend is higher and PUG has been spot on with his commentary and his levels make a lot of sense.

    -D

  10. pugsma said

    sP500 is now up above the 62% Fib of 3729 and approaching the 78% Fib of 3746.

    Looking Good Bill Ray, Feeling Good Louis !!!

  11. pugsma said

    It’s interesting that the stat for the average Santa Rally 7-day trading period ending today is 1.4% and a 1.4% gain from 3689 EOD Wed, Dec 23rd is at 3740.

  12. pugsma said

    SP500 60-min chart MCAD went bull cross at 1pm EST and was confirmed at 2pm EST.

    Old school swing trading indicator. 🙂

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