What we must remember here is that this week we have to almost toss out the window, as the smart money is gone from the market, and as I warned we had the market reversal that was actually expected, and happen almost 100% of the time leading into major holidays.
The "smart money" does come back next week.
To the charts, and we can see on the hourly how we have had nothing but straight up on the market. The hourly chart is at EXTREME overbought conditions and it is likely the market needs to cool off some time next week. It is wayyy overdue.
We have been overbought now for a few days, and normally when this occurs its almost guarenteed we see some sort of sell off occur and will not be too far away.
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| santa claus rally |
Taking a look at the Nasdaq daily chart we can see the very nice downwards channel that started in OCT 2012 has now been breached and signalling higher prices are coming, but first we probably need to see the market cool off after such a massive run this week. Infact a bit of selling next week even if it is heavy would actually be good thing for the bulls.
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| santa claus rally |
As you can see when the smart money is out the market, we can see many violent moves in either direction. This holiday reversal was a good one, and more volume and smart money will slowly drift back into the market in by the end of next week.
Have a good weekend. Happy trading :-)
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