The weekly closed last week on a downtrend for a third week. The market had its biggest weekly fall since June 2013 with a 200 point range. iQuant predicted volatility and a test of 5200 and it is exactly what happened. Our target from 31 October of 5220 has been met and we wait for a bottom and capitulation of the bulls. December futures expire 19th December and we expect volumes to pick up at the end of the week as funds are rolled to March 2014. With two full trading weeks left for the year the market is currently up 12.5% for the year and traders will be looking to lock in profits. Downtrends can be seen on all three timeframes. We continue to expect weakness and the weekly chart shows support down to 5092 and a break of this level will see the market oversold and may lead to a flash crash. The weekly downside target continues to fall with a retest of 5200 expected. We continue to expect new short term lows to be set on the way to our weekly target at 5092 ? down from 5246 last week.
The daily short term shows a stop for Monday at 5205 with the weekly stop at 5255. The December downside target at 5217 has been hit and is now important resistance. Volumes are increasing as sellers are now increasing and looking for support. 5217 and 5255 are the key resistances for next week and any test and break of this level will reverse the weekly downtrend. A move above this level will indicate another short squeeze and a retest of 5465 highs.
iQuant indicates short positions with a stop at 5255. The weekly chart shows support at last weeks lows and we expect the market to retest the lows and set new lows for the Quarter.