Awaiting Bill Relief Decision

Current Position of the Market for Dec. 20, 2020 - Awaiting Relief Bill Decision

  • SPX Long-term trend: There is some good evidence that we are still in the bull market that started in 2009, which could continue into the first quarter of 2021 before coming to an end.
  • SPX Intermediate trend: New intermediate uptrend has been underway since 2234.
  • Cycles: Looking ahead. 90-year cycle – last low: 1932. Next low: 2022 .
  • Seven-year cycle – last low: 2016. Next low: 2023.

Market Analysis: SPX-IWM weekly charts

There is still no sign of relative weakness in IWM, but the index is reaching overhead trend lines which could provide resistance and halt its progress. The same can be said of SPX, but we are looking at weekly charts and an intermediate top still appears weeks away.

SPX daily chart

The near-term action in SPX will obviously result from whether the U.S. Congress passes another relief bill, and when. A senator mentioned that a vote would not be taken until Monday or Tuesday. The projection to 3740 which was made two weeks ago still stands, but given the current situation it would be foolish to make a definite forecast.

Friday’s action was fraught with volatility. After making a new high of 3726 in the first hour, the index started to correct, found support in the last hour on the 50-hour MA at 3686, and rallied back to 3716 just ahead of the close. This action will best be seen on the hourly chart. An accurate evaluation of the market’s short-term position cannot be made before at least next Tuesday.

SPX hourly chart

For the past two months, the short-term trend of SPX has been confined to a gently rising channel with prices dutifully observing the upper and lower limits of that channel. During the past couple of weeks, the index has created another smaller channel within the larger one, with Friday’s action spanning the 40+ point width of the smaller channel.

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Disclosure: Charts courtesy of QCharts.

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