Max, thinking this over a bit, I concur that you need maximum buying pressure to get above 1934 once it is breached. However, it can be done.
Near term, I think we have three potential high percentage plays:
a. Sell-off into the end of the month.
With the seasonal weakness and Max Pain, this should
be a lock if devoid of extraneous events. The recent
overbought condition necessitated this.
b. January effect - rally in January
This could be what gets us above the 1934 level again.
c. Correction in February
Whether January is a higher high or a lower high, we
should still have a correction of around 10-12% after
the peak.
I believe the seasonal clarity may give traders the ability to make some high percentage swing trades over the next 60-days.
In January, I believe we either take out 2065 and run into the 2100 level, or we make a lower high like 1965 or something. Either way, it should be a winning trade from the lows this month.
Speaking of which, I'm getting to like the 1793 (1806) number much more now. It is a .382 re-trace from 1387-2065 and a .618 re-trace of 1646-2065. It works really nice, and it is within reach. A 10% rally off that number would also give us a higher low. A 20% rally would give us a higher high.
For me, the line in the sand after COMPX 1934 is NDX 1430. That number is important for several reasons. One reason is that it roughly intersects the last up-channel we have left on the techs, drawn from the Sept. 21 and 27 lows on the NDX.
Anyway, whether this is going down in early 2002 or up, the next 60-days should basically trade the same, IMO. At the end of that 60-days, we should know which way we're ultimately headed.
The only scenario that doesn't work with what I've shown above is a drop all the way through January. I really don't know if that has happened in the last 15-years, or since the start of IRA's and 401K's. |
