Bears should take little comfort in Thursday’s price action, comatose though it may have seemed. The holiday-shortened session featured a weak bull-trap rally with about two hours to go, followed by a moderate selloff into the close that could not have inflicted much pain on otherwise giddy buyers. Notice that the end-of-day low failed to breach even a single ‘external’ low on the hourly chart. That would have required a print at 2047.50, whereas the actual low occurred two points higher, at 2049.50. That means bulls will begin the final week of the year with a slight edge, even without the boost stocks typically get between Christmas and New Year’s Eve. Accordingly, I’ll suggest using the 2080.50 target shown as a minimum upside projection for the near term. Traders can use a ‘mechanical’ bid at 2058.25, stop 2051.00, to get long, but this is recommended only to those who understand the simple rules that govern the tactic. If you’re unfamiliar with ‘mechanical’ trades, stay tuned to the chat room for tips in real time. I’ve sketched out a hypothetical example that explains it graphically.
