The following is a look at what can be expected in the stock market in the upcoming week, Nov 23-27.  We are looking at the S&P 500 .  Keep in mind the market is closed on Nov 26 and it closes early on Nov 27.  So we are looking at an abbreviated trading week.  Volume has already been light and has been declining since the march lows, but more recently has been declining since the end of October.  Expect volume to be quite light this week, especially Friday.

Monday set a false tone for last week.  We broke above the 1107 level mentioned in last weeks post.  The ride to 1118 should have been smooth sailing, but there was really no buying above in this region.  Selling was not that strong either, until Thursday.

On Tuesday when we couldn’t make new highs, but made new lows we had an indication that the market was likely to head lower.  Volume is also a factor in this.

This past week gave us very clear support and resistance levels. Here is what to look for:

A rise above 1098 is likely to cause a pop back to 1102-1104.  This is where former support, now resistance, comes into play.  That range that held most of the price action through early last week is now going to act as a ceiling.  If it climbs higher than that, expect more range bound trading between 1104-1113.  With the light volume we may see the market pushed around and may see a spike above the high, but unless it is accompanied by large volume the break is very highly likely to fail.  The market getting above the highs this week is not probabilistically high though.

The upside target is still 1118, but I am very leary of trading long up in that area unless it is for quick scalps.  UNLESS, once again volume makes a come back….from my keyboard to God’s ears.

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On the downside we have support at 1086-1084.  A break below indicates a move to 1076.  Below that watch how it reacts around the gap of 1072-1070.  A closing of that gap is bearish and indicates further selling.  A gap below that along with a close would be even more bearish.  Further support is at 1065 and 1060.

I will trade what the market gives.  But personally I do not believe this market is a buying opportunity.  In fact I think the wool has been pulled over the publics eyes and that this market and the economy are in serious trouble unless serious changes are made…and those changes cannot include more spending, incentives or pushing the consumer into more debt.

Trade in the direction of the trend but do not become attached to it.

Cory Mitchell, CMT
Chief Market Strategist
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