Good day!

The day started with strong gaps up into weekly resistance areas. The Indices didn’t have the strength to hold their morning gaps and we saw selling pressure for most of Friday''s session. The morning gap was filled and around the 14:00 pm ET''s reversal period and after 15 min double bottoms, the indices started with a recovery and closed the day in positive territory.   For the QQQQ that was more or less a flat close, while the DIA, as the strongest of Friday''s session, traded back half of its'' gain and closed in the middle of its'' daily range. Overall we can say that the market closed strongly at new weekly highs.

The DIA closed above its'' daily 200sma resistance area as did the QQQQ, while the SPY still has some room to reach it. Friday''s volume was average and that supported the bullish action that we have had over the last few weeks and we can see that on the daily charts. Thursday''s breakup and Friday''s continuation is part of the 4^th daily buying wave after March''s lows. The start was choppy and we can see that the last breakout was strong which is more clear on the weekly charts. Usually after three waves we can expect a correction and any new wave is more and more risky for new swing trades. Honestly, the market strength surprised me after the strong weekly move down, but the only thing that we can do is follow the market action. Is this all part of a full recovery or is the market just taking a breathe before more weakness.   We will see, but on the weekly charts we can say that the possibility for the short continuation is cancelled for now. The reversal is too strong for that.

As we can see on the weekly charts, the indices reached their strong resistance areas. The previous support area becomes resistance and after four daily buying waves the charts suggest that the odds for a correction are higher. The volume on the recovery from weekly lows decreased which is another argument for that. That is a possibility, but also we can see a strong break up with higher volume which will bring the indices to previous weekly highs and will form weekly double top patterns. Right now that scenario is open too because even though the indices reached stronger resistance areas, they closed strongly and next week''s action will be very important for that possibility.

If the indices consolidate at highs, or if their daily bull trend continues next week, then the odds for a weekly/monthly double top will increase. If the indices see a sharp correction from their resistance areas, then the odds for a weekly correction after four daily buying waves will increase. Right now, with the weekly charts on the move, and without consolidation, it is hard to say which direction is more possible. For that I need to see the behavior of the consolidation and from that I can make more clear conclusions.

If anyone has any questions or comments, please feel free to contact me.

Wish you all good trading!!!

Kind regards.

Ivica

 ivica@ivicacharts.com