My technical view this morning is presented in the charts below.
Chart 2. The S&P March futures contract (ES H6) - The 'Santa Rally' appears to have unfolded as a countertrend A-B-C (flat formation), evidenced by the new
low registered on Monday. It's very possible the month-old forecast, which called for a bullish Crab to reach its PRZ near 1926, to still be in play. This can
only be confirmed on a break under Monday's low. We stand ready to reconfigure our current trade structures at a moment's notice, should the need arise.
Chart 3. The S&P March futures contract (ES H6) - As of this writing, the price action remains weak, to say the least. Yet, we continue to forecast further
short-term relief. This should get underway as soon as TD Sequential Buy Countdown bars #12 and 13 (blue labels) are registered on this hourly chart in the
next couple of hours.
Chart 4. Dow Jones Industrial Average (DJIA) - The 3PDh remains in its 'first-floor-roof' phase, and the latter is expected to end soon, setting the stage for
the 'second-floor-wall' rally. Point 20 should occur in the vicinity of the blue line connecting the (year) 2000 and 2007 tops. Should this forecast play out, the
'second-floor-wall' rally should last into at least early April. The cupola should then complete in the subsequent weeks.
Chart 5. The all-US-stocks Arms Index printed 1.03 on Monday, a reading identical to last Friday's. Any short-term relief rally that lifts this index well above 1
could open the door for the final installment, per the forecast in charts #2 and #3.
Chart 6. Weekly options - Relatively high Open Interest in the $205 strike from both the bullish and bearish sides. Any relief rally threatening those 44,258
$204-strike put contracts should prove unsustainable, likely marking the turnaround point. Notice the equally high concentration at the $198 strike, just
below the SHARK PRZ that was reached on Monday.
Chart 7. Monthly options - The 254,994 $195-strike put contracts would immediately come to the fore upon a break under $200 (176,833 puts), and most
certainly Monday's low. This would be consistent with the month-old forecast reiterated in chart #2 (i.e., $SPY equivalent of ~194.40).
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