Skid Pro Quo?

Markets have a tendency to make 1st hour highs or lows when a change in at least the short term trend is at hand.

On Turnaround Tuesday, the SPX set a 1st hour high and sold off, leaving a Lizard sell signal, a new 10-day Topping Tail. This is where you get a new 10-day high, but after running up, there is a reversal that sees a close near the open at session lows.

The drop off the rally high shows 4 waves and, as I write this Tuesday night, the futures are flirting with breakage below yesterday’s session lows.

If we break down below Tuesday’s lows overnight, this could precipitate a Breakaway Gap and a direct move down to the breakdown target, 3040-3045. This is 90 degrees down from the ATH.

Of course, there is still the 3060 support area to contend with first.

Remember, clearing the minimum 3034 projection gave a target near 3085-3090.

So far the high close is 3093.

Checking an hourly shows the SPX is perched on multiple micro support — the 50 hour moving average and a trendline from November 6.

Given the Tuesday’s impulsive structure, downside follow through could see the SPX skid to the open gap from November 1 — the aforesaid 3040-3045 region.

This ties to the 20 day moving average which hasn’t been tested in over a month.

So a pullback, even in a bullish context, is warranted.

The important Weekly Swing Chart will turn down this week on trade below 3065.89, so that is a level to watch.

If it doesn’t act as support, the indication is that it is probably the mid-point of a reaction.

Following our projected cycle turning point late last week, gold turned up as expected yesterday, with its reversal leading us to recommend new positions in GDXJ, JNUG and GLD calls.

An hourly GLD shows the hourly Lizard at the low for the move and the subsequent micro breakout.

Clearing 140 puts GLD in a strong position.

Notice GLD reclaimed its 20 hour m.a. on the close for the first time this month with the overhead 50 hour m.a. near lateral micro resistance at 140.

Conclusion. The SPX reversed from a new high at 2 times the March 2000 top, a natural level to look for selling.

With November’s strength in the indices and a rebound in speculative sentiment exemplified in biotech in names like ARWR and CRSP which members took long last week along with rebounds in glamours such as ROKU, the assumption that the coast was clear for a continued rally into year-end was prevalent… a perfect time for the perverse Mr. Market to set the hook with a failure from a new high.

Yesterday premarket, we recommended ROKU long to be sold near 134.

An hourly ROKU below shows the resistance into an open gap.

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