Markets faced with a new rally phase

Since more than a week the markets are consolidating the considerable profits of the Thanksgiving rally. Whereas the NASDAQ-100 still closed in red, the Dow and the S&P 500 finished the week in green, and especially these two indexes are able to rev up again next week:  

In the chart above you see the course of the S&P 500 rally including the target until Xmas we forecast on 11/18. In the daily 9 Candle GUNNER24 Down Setup we identified exactly the low of the last correction move at the lower line of the 3rd double arc. I rather expect a pretty choppy upmove through Xmas that is supposed to head for the 3rd double arc several times in the course of the upmove. As we all know, the upswing was considerably sharper than expected proceeding with less disturbance than expected. Moreover the rally target was exceeded substantially. Let’s have a closer look at the daily down setup with the actual state now:  

The sharp upmove achieved straightaway the re-conquest of the extremely important 1*1 Gann Angle. It was broken upwards without much testing around. That’s a sign for a very strong and permanent upmove. Furthermore the 3rd double arc hasn’t been headed for at all yet. That’s another sign for a super strong upmove. The market is clearly quoting in the bullish half of the setup. So, according to the GUNNER24 Trading Rules only profitable long-entries have to be looked for!

Likewise the market followed now the resistance of the 2nd upwards. Certainly it didn’t manage to re-conquer this strong resistance completely. But since it is visibly attracted upwards by this magnet, the time permits that it is going to continue this way for at least 5-7 trading days. The temporal influence of the 2nd double arc is not going to end considerably before Xmas. So in an extreme case the rally may easily go on for two more weeks before a greater correction will have to start because the temporal support of the 2nd will come to an end then.

But, as mentioned I don’t expect the rally to continue for more than 5-7 days. The reason are the relevant resistances lying above the price. On one hand it’s the Resistance Gann Angle and on the other hand it’s the horizontal resistance at 1429. Both magnets will meet at 1429 in 6 trading days, both magnets are predestined to force the market into the next correction/consolidation there.

Please pay attention now to the Friday candle. It closed narrowly beneath the actual resistance angle. It was the second test of this angle within the cupent upswing.

According to the rules a daily close above this resistance angle would mean that proximately the 1429 will have to be headed for….

Let’s have a look now at the daily up setup to be applied at the low of 11/16. Just like the actual daily down setup, the initial impulse comprises 9 days. That’s a very conspicuous duplicity of occurrences.

Whereas in the down setup the first initial impulse had a length of 55 points, the initial up impulse comprises as many as 76 points. So it resulted considerably stronger than the down impulse of the year-highs did. The bulls have shown real strength. They are at the helm, and the expected extensions of this initial impulse speak for themselves in terms of the probable uptargets.

Technically the rally should run at least up to the 2nd double arc near the year-highs. If the rally also wants to end at the 3rd double arc (like the daily down setup above) it will end at 1528 in spring 2013… This target – as well in price as in time – has been forecast for months as to be the most likely rally target. About that, please pay also attention to the weekly 5 candle up setup following below.

Look again to the Friday candle. It didn’t close just closely beneath the resistance angle in the down setup but also closely beneath the Blue Arc in the up setup. According to the rules any daily close above the Blue Arc will be the next daily buy signal. So we’ll buy the market if Monday or Tuesday closes above 1420. If that doesn’t succeed, if the market keeps on consolidating during the coming two days, from Wednesday on we’ll buy any close above the Blue Arc with first target 1442 – no SL.

I reckon with a breakout above the 1420 during the next two days because the market will join the clearly identifiable Rally Gann Angle upwards. The gradient of this rally angle is very steep. The steeper the gradient of a rally angle is the stronger will be the upwards power of a swing… The market is able to join it upwards for a long time.

So, also in the actual daily up setup we can derive the 1528 target now.

In the weekly up setup the 1528 are situated at the 3rd double arc being the main target of the entire move started in 2011. You, gentle readers, have been acquainted with this setup including target for months. That’s why I refrain from the usual GUNNER24 Analysis. But there’s one thing I’d like to demonstrate, something new so to speak: It’s the apparently existing symmetry of the different swings. Down-wave A is synchronous with down-wave C in terms of extension and duration. If now up-wave D wants to be synchronized with B…, and voilà the 1528 are being confirmed again!

Be prepared!

Eduard Altmann