Key points for the week, US Markets:
Market hit the expected resistance area near 312 in SPY and 203 in QQQ. Both these indices have paused since.
While one cannot tell whether the market will reverse here, we can expect and have seen some reaction – either consolidation or pullback.
As we stated a couple of weeks ago in the bulletin, markets were getting stretched and a pullback can be expected. The stated levels were identified using confluence of various FIB extensions and other statistical models.
During past week the markets indeed hit those areas and pulled back. While there is no trade call from these levels, if these levels hold, we shall identify them as new supply zone.
We notice that while the market rose slightly in last two days, after earlier being thrown back, the volumes were thinning fast. Same behaviour is seen in QQQ below.
IWM, which represents midcap companies, is considerably low. While the two indices above were rallying since beginning of November, IWM had been crawling sideways.
We shall wait until the market shows preference on either direction. Given thanksgiving week ahead, the market is expected to be slow without much significant movement. We shall have a clearer idea in next week. If the pivot above 308 in #SPY holds the market will resume rally, otherwise we may expect some correction to the levels identified in the images. Not surprisingly those levels – 302 in SPY and 195 in #QQQ coincide with 38% fib retracement. For now it is only wait and watch until the market tells us.