This is still a suckers’ market. Big rally in the morning that was sold in the afternoon. All in CPI and FED’s expectations. Everyone knows what is going to happen, yet everyone freaks out. But from the technical perspective, the market hit resistance and sold off from there. On the chart below, we can see that the price almost hit 3,966 resistance right below 200-day MA.

And on the Ichimoku chart, we hit the red line resistance and sold off. Basically, the market got rejected on multiple levels:

The price trend is still weak and not gaining any momentum, so bulls have a lot of work to do to convince bears to flip the side (though I think it is a matter of time before it happens). However, for tomorrow, the outlook is bearish and we may continue selling:

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Institutional investors are still on vacation and will return to the markets next week. That means retail investors drive this market and spook themselves easily with every market move. It could be seen in today’s market price action. A relatively big move early in the morning before FED’s meeting minutes were published, and selloff right after that. But the retail investors who spooked themselves do not have enough money to push the market deep into the red. Last year, when Powell said “inflation,” markets lost 3%. Today? Sleepy day.

But it still can all change tomorrow. My expectations are that the investors will (as the media like to say) digest the meeting minutes and sell the market. Trend forecasting suggests it.

Other than that, we have a motionless and directionless market. It sits right at the support and waits for resolution. In this case, staying aside and waiting for the trend is best. The Ichimoku cloud is pretty much negative and suggests that more selling may still come, so let’s stay put and wait.

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Another sleepy day. We received labor data this morning indicating a strong labor market. That rocked the market, and investors panicked again, thinking that the FED would go amock and raise the rates more, higher, longer, and indefinitely. But they forget that the FED has its hands tight already unless they want to crash the entire economy and the world with it. And the labor data is not the only piece of the puzzle here. Overall, inflation is easing, although we still may wake up to a nasty surprise tomorrow.

Although the market sold off today, it was a mild selling again. We saw a 1.20% decline at first, but then Bullard said that the FED might slow down the rate hikes, and the market recovered some of the losses (it was down only 0.70% at some point). Yet the market finished down -1.00%. But the most important thing is it still holds the 3,800 support. As of now, it is a good thing.

The price is inside the green cloud and above the red cloud support line. The line is stepping up slowly, and the market must stay above it. If we break down, we will have a problem.
The blue line is still deep below the thick red line, which is not good. We need these lines to reverse. But as of now, these lines and the cloud changing into the red is not good for the market. We may fail.

The expectation is that the market will continue lower or sideways. But tomorrow, before the market opens, we will receive CPI data. That can completely change the narrative. If CPI comes out weak and slowing, the market will likely rally. If the CPI shows inflation rising again, expect a sell-off. It is a wild card and unpredictable. Anything can happen, so the best strategy now is to stay aside.
 

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The market responded to bad data as forecasted with sharp selling in the morning, but it managed to recover almost all losses by the end of the session. This is the same choppy behavior as we saw last week:

The market is still indecisive and going sideways. That is good unless the support at 3,800 fails and we crash. If this level holds, we may see a resumed buying and a new rally.

Tomorrow, we will probably see a choppy market which may finish down by the end of the day.

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The year 2022 ended lower and in a recession-fear mode, but we have already started seeing some analysts turning bullish, saying we have seen the lows. Have we? Or are we heading lower in 2023? The economy is still strong and resilient to fallout. The labor market is seeing some layoffs, but unemployment is still extremely low. I believe we are seeing a return to the median or a return to normalcy. Before, businesses were overinvesting, oversupplying, and over-employing. Now they are correcting their mistakes, and that brings a decline cycle. We may see some slowdown, and that is normal. After a hot boom, there will be slow growth or even contraction, but that doesn’t mean a recession. Unfortunately, the new breed of investors does not understand it and panics. And this market is emotions driven.

On Monday, the markets were closed for the holidays. And the futures opened with a gap up, but that quickly sold off, and we are seeing a candle called a shooting star (on the chart above as well as the one below). Of course, it means nothing at this moment. The market can still open and rally tomorrow.

But the odds of it happening are low. The trend forecast indicates selling to continue tomorrow. Last week didn’t work much, and the market behaved exactly opposite from what I expected. We had a large selloff in the morning with a sharp reversal in the afternoon. That was difficult to trade, and so we stayed on the sidelines. Tomorrow it may be similar, and we may stay aside and wait for some trend to display the direction of this market.

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Last day of the 2022 year. It was a horrible year. But I must say, I was able to navigate it relatively well. Although I decided to roll the trades and not close them for a loss, I managed to stay positive and grow the accounts. The only problem is that many of these trades are now open with a long time to expire, and it will take time to clear them and collect my premiums. But I am optimistic. I believe 2023 will be better, and the recession will not come (yet, I will protect my portfolios just in case). And when the markets start trending again, I will make more money.

The market was selling the whole day on the last trading day, but we saw a robust rally in the end, which erased all intraday losses. That is yet another day when the market rejected bears and held the support at 50% Fib. The price managed to stay above the red cloud line. It is held inside the green cloud, but the issue here is that the blue line is still deep below the red line and not much reversing, and the cloud is about to change into a red one again. We need bulls to step in and push the price up.

We are still seeing the blue line sharply below the red. And there is no sign of the blue line trend reversing. That is not a good sign. It can indicate further decline to come. We need bulls to step in, push the price higher, and reverse the blue line back up.
The good thing is that we are above the red cloud support line. If that holds, the market can be saved. The cloud is also slowly changing from green to red, and so far, in this choppy market, it has indicated a potential bottom. So let’s see how this develops.

So far, the Ichimoku chart resembles the price action from September 2022 (see the blue boxes: blue crossing below red, cloud changing from red to green, etc.) and what followed after that was not good.

The chart above shows how the market continued declining the whole day, but in the last hour, it rallied and erased all losses (well, almost all of them). Yet, it defied my forecast, so the last two days didn’t work. The market did the exact opposite. What is going to happen next? It is difficult to say right now as the market is like a bouncing boat on a stormy sea. We have no direction and too many emotions out there. We need the sentiment to calm down first. In a market like this, the best approach is to sit tight and wait for some clue about where this thing wants to go.
 

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Yesterday, everyone was panicking about the inevitable recession, today, after we received jobless claims showing more people asking for unemployment support, everyone was no longer afraid of a recession, and the markets erased yesterday’s losses. This is a type of market that is hard to predict and expect. And subsequently hard to trade.

At least, we can be relieved for a moment seeing the market reclaiming the support that was lost yesterday. We are back above the 50% Fib. But will it hold?
The chart below shows the cloud that provides more room for decline (the market can decline to the red cloud line and still be positive, though it would have a negative effect on future price action).

The problem is that we are in the cloud, and there is no decisive action to move above it, but the most concerning action is that the blue line crossed (sharply) below the red line and that is never a good sign, even in this choppy market. This happened only once in recent history (in December 2021), and the blue line was hugging the red line, then briefly moved above it and, after two months, crossed back down, and the bear market developed. Today, we see the blue line sharply down.

Although the trend forecasting indicates a choppy day with some positive upward-moving trend, I do not think this will happen. Yes, we may see the last day of the 2022 rally, but the price is set to collapse. Will it be tomorrow? Or early next year? Even the WVAP line on the chart above is sharply down, which is a line that doesn’t reverse easily either. All this points to more selling to come.
 

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We had another selloff based on no news, just recession fears. Since most people working on Wall Street are on vacation, this selling is mostly retail. That could be good as it may spark a rally in January.

However, the problem we are seeing is that the market is breaking below its support. The chart above shows the price still holding at 50% Fib retracement, but the chart below indicates that this support is crumbling as the price closed below the red cloud line.

The expectations for today didn’t play out, and expectations for tomorrow are negative. There is a possibility that the market will try to return to the point of control at 3,840, but then it may go lower from there. And it may not happen at all, and we may continue selling.

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