Market Hangs in the Balance

I was looking for about a 55% - 60% chance for a bump up on Monday and Tuesday. That would come, I speculated, ahead of some possible Tax-Selling and a little Short-Term Capital Gains selling on Wednesday, which is the last trading day of the year. That was then, this is now.....

I'm bringing that probability down just a bit because of the warfare going on between Israel and Hamas. I will use the SPY chart as a proxy for the market to demonstrate the possibilities. If we drop much below Friday's lows today then the market is at risk for a Falling Three Methods and a breach of 85 on SPY. That opens the way for a move down to the 82 area. If SPY can move above the 87.50 area (and the SPX can move above the 875 area as I noted on Friday) then it opens the door for the possible soft two-day bump I was speculating about. I think that 92.50 is probably out of reach on a bullish move Monday-Wednesday, but 90.00 is possible if traders drift the market early this week.

Here is a chart of the SPY:
(click on image to enlarge)

Once again, don't look for a lot of momentum this week. It's a holiday-shortened week and I expect light-ish volume on most days except Wednesday and maybe Friday (but I doubt most Big Money traders will want to come back from Wednesday until the following Monday). Watch for short swings this week. I will still keep an eye on the intra-day stuff and not look to hard for a big momentum move.

8:55 am MT: A Falling Three it is.....at least for now. Just as I speculated above, the market was hanging in the balance and could tip down on the turmoil in the Middle East. I came in to the weekend thinking we might see a little bump, but that changed with the conflict in Israel. The SPY (as a proxy for the market) has a good chance of heading to 85 from here.....

Here is an updated chart of the SPY:
(click on image to enlarge)


Here is the 15m chart of the SPY:
(click on image to enlarge)

I don't like the price action for the Bulls, although an intra-day rally back to the 86.50 area is possible. If we form a Bear Flag on the 15m charts, then I might look at a short swing put into the end of the day. Once again, I'm not looking for big momentum but rather little dribblers.....so I'm not exactly ready to get too crazy with a bunch of big trades.