It is easy to analyze stocks or markets when the they are traveling in a chartered territory. It is very difficult to analyze when they are traveling in an unchartered territory such as SPX, NDX and DOW JONES are these days making new highs every other day.
On Friday December 27th, SPX closed at 1841after hitting the high of 1844.89. Dow Jones closed at 16478.41
SPX is therefore just 34 points away from reaching the mid-January target of 1875. Traders are on holiday and when they come back after new year then we expect some activity in the market and S&P is expected to reach 1875. On the way to 1875 S&P could however stop at 1860 and consolidate. It is important that S&P closes above 1860 sometimes in January in order for SPX to continue upward.
NASDAQ 100 has hit the brick wall on Friday, December 27th when it hit 3591.31. It closed at 3574.02. It would not be surprise if NASDAQ 100 comes down and close the gap created on December 23rd.
It is also important for traders to watch the performance of Dow Jones components such as BA, CAT, IBM, MMM, CVX and XOM for the clue as these are hot stocks and moving up aggressively. Dow Jones closed at 16,478 and has at least 400 points left in it before we see it topping out.
It could be that Dow Jones hit 16,875 and SPX hit 1875 simultaneously and/or both come close to their respective targets and then roll over. NASDAQ 100 could reach 3670-3735.
In short after new year one final rally leg is expected towards 1855-1875 level which could be the exhaustion move trapping all those who want to buy into new year and then Big Boys may pull the plug. In other words clouds are coming and when there are clouds there is a chance of rain and sometimes it just rains like cats and dogs. Traders are advised to get their umbrellas out by mid-January or be ready to get wet.