The SPX is once again trading at the fence between a strong SPX and weak SPX. Here are the scenarios which I expect the market to play out.
If we see strong buying depicted on scenario 1 where a big bull candle appear, the market would see bulls coming into the SPX and the direction would be a buy SPX. This is a typical price action of a breakout.
If we see small candle and also prices failing to close above Fridays high, then the market is either not ready to go up or coming down instead.
If the market is coming down, we next have to gauge the weakness of the market. If price comes down but fails to move into the blue zone, the market is ranging at most. Only if I see prices come into the blue zone would I look into shorting the SPX. One thing however, the blue zone would see me shorting with small targets. I would not believe a thorough weak SPX would see prices break 2152.2. If it does so I will post my next move. Till then…happy trading.