After The Bell-Before The Bell SPY Update Dec 23rd

On Dec 18th I identified the correct uptrend for the SPY using Pitchfork analysis. At the time, the market bears looked like they were going to give the bulls a knock out blow with no Santa Rally.

On Dec 13th I used price and time counting to project an upside target and date. At the time, again bearish news headlines ruled the day.

Today we are focused on a 1 month chart of SPY, to help support or deny my previous post. When forecasting, its important to check your list twice, use multiple time frames, multiple indicators and re-check often.

On this chart I included volume by price bars to the left side of the chart; we are concerned with the longest bar. Stock trading is about price discovery, where is the balance between buyers and sellers?

The longest bar is at the 124/125 level. In early December, this area of supply won the day moving the shares lower. Negative headlines, along with the 200 day moving average proved too firm of resistance for the bulls.

The question is: will supply overcome demand once again? Please do not under estimate the bulls ability to run the SPY up to my previous price targets, once able to move past an overhead supply area. What was resistance quickly becomes support when the area is broken to the upside.

OBV is trending higher. The strong move up starting Dec 14th.

The largest open interest for call contracts for January is 130, right around my price target - noted Dec 13th. Options expiration is too far out for this to be a factor; but stocks tend to gravitate towards option prices that make the contracts worthless.

Conclusion: My forecast for 1290 to 1320, although many times in December looked improbable, remains. The forecast remains not because stocks should be going up, they should not be (Look at ORCL earnings miss, 1st in 10 years), the forecast remains because the technicals have not changed.

Despite the rest of the worlds stock markets already in a bear, the USA extend and pretend continues on for just a little while longer.

This is not a recommendation to buy the SPY, just a forecast for a top. On the contrary, I would be running from bull positions as fast as possible. One bank failure and its all over.

I am averaging into TVIX.

Tim Kathlina