SPX: Close in Jan will say a lot about what will happen

Jan 27

SPX rally stalled today a bit and it may keep going a bit sideways next week. If we see strong rejection at this level (1.764 fib extension of this sequence), then the rally might be over and price will head back down rather quickly. Depending on how quick and strong the downturn begins during the last few days of January, it will tell us how deep of a correction we should expect and for how long. If the current strong monthly candle turns into a doji or worse, a red candle, this wave 2 will make the bull suffer for at least 2 to 3 months and price may drop deep enough to close a few gaps left behind during this rally. If we see some sideways action next week followed by one last push towards 4950, then, chances will increase of a milder wave 2 correction back to 4680-4780 cluster (some .618 ish area retrace) in Feb followed by wave 3 resumption towards 5500 and more. We'll see what happens next week. Monthly close will be important. Keeping close eye on RSI for bearish divergences in higher timeframe. Daily already has a pretty obvious bearish divergence. Another push higher in price with weakening RSI will confirm the end of this rally.