SPX S&P 500 Daily Chart; H&S; Potential Island Reversal or Gap Fill; 20-day MA Resistance at 6024; 50-day MA Support at 5940

Christmas, and Kwanzaa, celebrations are over. The wrapping paper and Boxing Day boxes are in the trash at the curb. Several gifts are not yet functional because the batteries were forgotten, as occurs every holiday. Keystone received a nice sweater, as long as you do not mind one sleeve longer than the other. New Year's Eve is on tap next when the drunks crash on the local highways.

Two trading days remain in 2024 and then Thursday, 1/2/25, is the first day of trading with Baby New Year. King Donnie Trump, the orange-headed bloviating carnival clown, will retake the Oval Office this month that he disgraced on 1/6/21 when he refused to stop the Capitol Hill Riot, and instead cheered as Americans hurt and maimed each other, because the violence fed his sick narcissistic ego. Everyone hopes he has a better legacy than his first term which was a 'whining crybaby sore loser'. King Cry Baby.

Anyhoo, the SPX daily chart is interesting. In early November, price gaps higher from 5775 to 5870 (orange circle) producing a gap big enough to drive a truck through. That is a one hundo instantaneous gain after Donnie won the presidential election. Price has sat on this island at 5870 and above ever since. The island has three mountains and also a palm tree. The price behavior sets the stage for a potential island reversal pattern if price comes down to 5870, and then fails directly back through the gap, down to 5775 in a heartbeat. On the other hand, price may simply trend lower and fill the huge gap on the way down which would be a gap fill and not an island reversal.

The three mountains on the island form a H&S (head and shoulders, no, not the shampoo) pattern. The head is at 6091, neckline at 5870, so that is 221 points difference. Thus, the lower target is 5649 if the neckline fails at 5870. That would get everyone's attention.

Price receives the neggie d spankdown as previously forecasted and explained in early December. Price teased the 5870 support but bounced back up to form that right shoulder. Note how price collapses through both the 20 and 50-day MA's in one fell swoop. Those are key moving averages so price needs to show respect and come back up for a back kiss and test to prove it wants to go lower. Price comes back to the 50, and then falls for a day again, but then catapults higher up through the 50 back up to back test the 20.

The SPX plays at the 20-day MA resistance at 6024 for a couple days, and it holds, and then collapses down to the 50-day MA support at 5940, which holds, and then price recovers during the Friday session to end the week smack-dab in the middle of the 20-day MA overhead resistance and 50-day MA support. Price will exit one of these two MA's, maybe on Monday, and that will tell you the direction forward for a few days and perhaps beyond (if the 5870 fails it is likely lights out for the stock market).

We shall see if the critical 5870 fails before or after the crowd sings "Auld Lang Syne." The bulls will be singing "When the Saints Go Marching In" with Satchmo if the SPX jumps above 6024 while the bears will rejoice and sing "It's a Heartache" to begin the new year if the S&P 500 collapses below the key 5870 heading far lower. Write 5870 on a sticky note and put it on your forehead.

Bonnie is an interesting story. As she prepared her first album, her voice turned raspy and scratchy, and it would be permanent, and she was sad thinking that her singing career was over before it could even start. She released the single anyway and her raspy voice was an instant global success. She immediately catapulted to international fame. Her voice was unique. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Monday, 12/30/24, at 11:46 AM EST: The bulls slip on a banana peel and fall down the cellar steps this morning. The SPX drops to 5869 testing the critical 5870 support, that happened fast, and bounced. There will likely be additional tests of this support. The Fed has its jackboot on the throat of volatility to stop the selling and it succeeds with SPX recovering to 5914. The 50-day MA is 5942 and failed out of the gate so price may want to go up for a back test. For now, the SPX remains on the island.

Note Added Tuesday, 12/31/24, at 2:05 PM EST: The SPX is teasing again on the last day of trading for 2024. The S&P 500 drops to 5870.45 a couple minutes ago and bounces. Price is testing the critical 5870 support which is the edge of the island. Bounce or die. What will happen? Bears will win as long as VIX stays above 17.03 but if VIX drops below 17.03, the bulls will battle back.