DOW Friday Closing Price - 43829
SPX Friday Closing Price - 6051
NASDAQ Friday Closing Price - 21780
RUT Friday Closing Price - 2346

This past week was a dichotomy week, with the NASDAQ making a new all-time high and closing near the high of the week and the rest of the indexes having a red week and closing either in the lower half of the week's trading range (SPX) or on the low of the week (DOW and RUT). I could find no fundamental reason for the dichotomy to be so strong this week so I can't explain why it happened. Nonetheless, the DOW and the RUT did generate failure signals on the weekly closing chart and that does suggest that the overall market has likely started its building of a new support base so that when Trump takes the reign of the country, risk/reward ratios will be clear, as well as direction for the first couple of months of his presidency.

The key index to follow for the next few weeks is the SPX. It is what I call the "sanity" index as it most closely portrays the reality of the overall market. No signals (neither bear not bull) were given this past week. The Fed will announce their Fed rate decision on Wednesday and that could be the "tipping" point for the next few weeks of action. The Fed rate decision is not expected to be catalytic as there is a better than 90% chance that the Fed will cut rates by 25 points, but that is the last report of any consequence due out for the rest of the month, meaning that the traders can make some short-term decisions without worrying that some report will come out that will turn things around unexpectedly.

As I have stated for the past 3 weeks, the traders do not have any dependable support levels built nearby and though the initial reaction to the Trump win is that it will help the market go higher, the reality is that many of his plans are either unclear or have potential negatives attached. Under such a situation, the bulls need to have support levels nearby that if broken are dependable indicators of change. At this time, there are none close by. In addition, the indexes are in an overbought condition at present and that is never a good scenario to have when thinking about buying more shares of stocks.

As such and mentioning that the SPX is the key right now, here are the levels to watch. On an intraweek basis, the all-time high is at 6099 (6090 on a daily closing basis). A new high will keep the bulls in control and push back the support building process. There are two daily close supports below that have to be watched. The first one is at 6034 and the second one is at 6001. A close below the former will generate a short-term sell signal that would take away some ammunition away from the bulls. The latter is the previous all-time high daily close and a close below that would give a failure signal against the bears and would confirm the sell signal as well. The index closed in the lower half of the week's trading range (closed at 6051 and the trading range was 6029-6092), suggesting further downside below last week's low at 6029 will be seen this week. the chart suggests that the 6029 low will be broken on either Monday or Tuesday but then the traders will wait for the Fed rate decision on Wednesday to decide what to do.

The overall scenario painted above does suggest that the indexes will continue to correct downward to build support. In looking at the overall charts (Monthly, weekly and daily), last months low in the SPX at 5696 is not likely to be broken this month or even in the first 3 weeks of January. The weekly chart suggests that a drop down to around 5700 would be the most possibly seen but the probabilities of even getting down that low are small. The daily chart does suggest that the island gap made after the Trump win announcement (gap down between 5811 and 5775 and the gap up between 5783 and 5864) will be tested but not likely closed, meaning that a drop down to the 5811-5859 is likely to be seen (between now and January 20th.). This means that about a 4% correction will happen over the next 6 weeks

That is what the charts state (at this time) will happen, barring any catalytic fundamental change. As such, the time frame for this to occur exactly is impossible to determine. This has been a runaway freight trading scenario where the bulls have been in full control and the bears (in the big and controlling-in-the-market stocks) have been totally defenseless. Giving up that control based on need (support base building) or fear (Trump will not accomplish what he promised) is difficult for them to do and more difficult to determine the exact dates. Bear that in mind.

HSI Index generated a new 4-week intraweek high and closed green but did drop 5.3% from the high of the week, to close in the lower half of the week's trading range, suggesting further downside below last week's low at 19695 will be seen this week. The reason for the big-to-the-upside-and-then-big-to-the-downside action was that the Chinese government stated early in the week their intentions to support the economy but then did not supply any tangible proof or plans as to how they would do it. The traders reacted accordingly to the news. Chart-wise though, nothing of any consequence occurred, other than the rally has now set up a level of resistance that is decently strong and indicative for the future, if and when the index does go below last week's low. On that front, the index made a new 9-week low 3 weeks ago and did generate a confirmed failure signal against the bulls. That Failure signal has now been negated but that low needs to have a successful retest of it before the bulls have confidence that the downtrend is over. As such, an intraweek drop below last week's low will open the door for such a retest and as long as the 9-week low at 19054 does not get broken and then a rally above the high this week occurs, the retest will be successful. The fundamental picture and promise of support by the government does give the bulls the edge, meaning that a sideways trend for the next 6 week will likely be seen. The key this week and on a weekly closing basis, is the previous weekly closing high at 19553 (19636 on a daily closing basis). That level should not be broken. If all of that occurs over the next 2 weeks, the index should trade between the 19700 and 20700 levels until after the Trump inauguration event.

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GOLD(Feb 2025 chart) made a new 5-week intraweek high but then dropped 2.9% from the high of the week, to close green but only $16 above the previous week's close and near the low of the week, suggesting further downside below last week's low at $2627 will be seen this week. The 9-week low at $2535, which was made 6-weeks ago, has not yet been tested and it does require/need such a test, for that low to become a new and dependable support level from which the bulls can try to renew the uptrend. The chart suggests that a drop down to the $2604 level will occur (perhaps lower but the chances of that being no better than 30-70. After that and until Trump's inauguration, Gold is likely to trade between $2600 and $2700.

OIL generated another uneventful week as it continued to trade within the parameters set during the past 5 weeks, between 66.61 and 71.48. Oil did close on the high of the week, suggesting further upside above last week's high at 71.29 will be seen this week. The levels to watch at 66.61 and 72.48 (same levels have been in place for the past 6 weeks). Those two levels are short-term pivotal. The two long-term pivotal levels are 65.27 and 78.46. The upside one does require positive fundamental news. The probabilities still favor the bears but it does not seem that this week that will be in play.

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