Up Is the Path of Least Resistance

Since last Wednesday, we anticipated chop and digestion leading into the FOMC event. Yesterday’s action—while not yet an explosive breakout—provided further credence to our expectation that markets are poised to march higher.

Reference our Morning Note from last Thursday (Dec 4), where we outlined why the market is primed for a move higher in the near-to-medium term. The confluence of factors pointing to a bullish trend continues to strengthen:

• Technical Strength: A growing number of setups on underlying stocks.
• Small Caps: IWM is continuing its breakout.
• Fed Support: A dovish meeting coupled with the announcement of balance sheet expansion via short-term Treasuries.

The Caveat: While the market is poised for "much higher," we rarely go straight up. As noted yesterday, while the Fed meeting was a catalyst, we still have key events pending—namely AVGO earnings tonight and the Bank of Japan's policy decision next Friday.

Today's Trading

Today's theoretical range is wide (6780 to 6985), but realistically we are looking at 6800–6900.

GEX Profile

• ↑ Upside: Above 6850 opens the move to 6875. Through 6875 targets 6900. Above 6900, we can see 6920, 6950, and potentially 6985 (less likely).
• ↓ Downside: Below 6850 opens the move to 6820. Through 6820 targets 6800, and below there 6775.

Long Plan

• Breakout: Above 6875 targets 6900, with 6881, 6884, 6888, 6894 as levels along the way.
• Extension: Above 6900 targets 6910, 6920. Above 6930 brings 6950. Through 6950, we can see 6985.
• Dip Buy Zones: 6844, 6837, 6826, 6810, 6775, 6765.

Short Plan

• Breakdown: Below 6844 targets 6837 and 6826.
• Continuation: Below 6826 targets 6807, with 6819, 6814 as levels along the way.
• Flush: Below 6798 brings 6764, with 6789–6792, 6780, 6775, 6770 as levels along the way.
• Extension: Below 6764 brings 6750, and below 6750 brings 6726.
• Extreme Weakness: If the bottom falls out, look for 6714, 6709, 6700, and finally 6680.