Today’s analyses are strictly for technical analysis grunts without financial risk issues, geopolitical concerns, or satire. I suggest a review of “A Dow, Nasdaq, S&P 500, and Russell Technical Analysis With a Risk Overview” if you want to peruse my list of issues covered in October 2021. A new variable worth mentioning is Omicron, but that mutant fell under the pandemic bus and is searching for a more virulent partner to merge with. Imagine the ramifications of an Omicron/Delta recombinant (born Dec. 15).

 

Let’s dive right into the Dow, S&P 500, NASDAQ 100, and Russell 2000 charts before blasting a few fireworks to ring in 2022. To view a larger version of any chart below, right-click on it and choose the “view image” option.

$DJI Dow Jones Industrial Index weekly chart as of Dec. 31, 2021 close…

Excerpt from the Oct. 12, 2021 weekly chart analysis:

“Dip-buying surfaced in the 33,600s around the 38.2% Fibonacci extension and just above lateral support drawn back to the Tweezer Bottom. Note that the buy volume for the candlesticks that broke away from the Ascending Broadening Wedge is responsible for the Tweezer Bottom’s lateral support… Caution is warranted in this scalping environment.”

The mid-June 2021 Tweezer Bottom established a base for the new Ascending Broadening Wedge. The lateral support line drawn back to the first Ascending Broadening Wedge breakout and subsequent Tweezer Bottom is updated to 33,312. That support level rests just above a 23.6% Fibonacci confluence, and just below the 38.2% Fibonacci extension where a triple candle low confirmed a second pivot off the new Ascending Broadening Wedge’s lower trendline. That pivot attracted a solid amount of buy Volume and led to the November high. The next low made a third tap on the lower trendline and was nearing the elusive 50 Exponential Average (EMA). The subsequent price pivot reached an all-time high of 36,679.44 this week, but ended with a bearish Plunger Candle (aka Shooting Star) that closed at 36,338.29.

The DMI-ADX remains in a negative trend with volatile price action since October, the StochRSI is wishing for a new rally, and buy Volume over the last five weeks is trending downward with large spikes in sell Volume. The song remains the same. Caution is warranted in this long and short scalping environment and layering capital into long-term positions is not recommended at this time.

 

$SPX S&P 500 Index weekly chart as of Dec. 31, 2021 close…

Excerpt from the Oct. 12, 2021 weekly chart analysis:

“The opening and closing prices for the last three weeks have remained above the 78.6% Fibonacci extension at 4,338, but the highs have continued onward along the topside red trendline… buy Volume has increased since mid-September and kept the price action above the 78.6% Fibonacci extension, but not enough to breach the overhead red trendline… Caution is warranted in this scalping environment.”

During the third week of October, buy Volume increased and the price action breached above the red downtrend line. The pivot off that low solidified the lower trendline for a new Ascending Broadening Wedge, and significant buy Volume pushed the price to new highs and eight weeks of choppy volatility. This week saw a new all-time high of 4,808.94 and ended with a bearish Plunger Candle close at 4,766.19.

The DMI-ADX remains in a negative trend, the StochRSI is wishing for a new rally, and sell Volume spiked in late November with buy Volume trending downward into the holiday season. The 50 EMA is trailing far below the price action since the 2020 election and is overdue for a visit. While printing new highs, new lateral support levels were manifested in the process. Caution is warranted in this long and short scalping environment and layering capital into long-term positions is not recommended at this time.

$NDX Nasdaq 100 Index E-Mini Futures weekly chart as of Dec. 31, 2021 close…

Excerpt from the Oct. 12, 2021 weekly chart analysis:

“A Tweezer Top in September printed an all-time high of 15,701, and the price action pivoted off a low of 14,385 last week. The Up Channel on the Nasdaq chart is slowly tightening and may qualify as a bearish Rising Wedge… Caution is warranted in this scalping environment.”

During the third week of October, buy Volume increased and the price breached above the red downtrend line. The potential for a Rising Wedge was negated after printing an all-time high of 16,767.50 in the fourth week of November, resulting in an Up Channel that dominates the chart. The price action has been volatile since the end of November with large sell Volume spikes and falling buy Volume into the holiday season. This week closed at 16,332.75 and printed a bearish Gravestone Doji.

The DMI-ADX is struggling to remain in a positive trend and the StochRSI is breaking down. The levels of near-term support are the Up Channel’s lower trendline, the 50 EMA, and the 14,368 lateral. If Omicron recombines with Delta to create a highly virulent and contagious mutant, the technology sector may rally in response to further lockdowns. For now, the price action is volatile and this week printed a bearish Gravestone Doji. Caution is warranted in this long and short scalping environment and layering capital into long-term positions is not recommended at this time.

$RUT Russell 2000 Index E-Mini Futures weekly chart as of Dec. 31, 2021 close…

Excerpt from the Oct. 12, 2021 weekly chart analysis:

“The Russell has a different topping pattern and study characteristics than the previous charts. A topside Descending Triangle is typically bearish… If the 50 EMA and lower trendline of the Descending Triangle are breached, the next bus stop is the 23.6%… The chart is ripe for long and short scalping.”

The price rallied off the October lows and broke out of the Descending Triangle. That topside breach printed a new all-time high of 2,460.80, but the price immediately plunged to the 50 EMA and tapped the 23.6% Fibonacci. The new all-time high and subsequent plunge morphed the Descending Triangle into a bearish Right-angled Ascending Broadening Formation. Last week’s rally provided the momentum that pushed the price above the red trendline this week. The price action closed at 2,242.80 and printed an indecisive Spinning Top candlestick.

The DMI-ADX is in a negative trend, the StochRSI is struggling to shift into a positive trend, and large sell Volume spikes have accompanied falling buy Volume into the holiday season. If the 23.6% Fibonacci is breached to the downside on large sell Volume, watch out below. The chart is ripe for long and short scalping, but layering large long-term positions is not recommended at this time.

Led Zepplin – Heartbreaker / The Song Remains The Same (1973)

 

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