$SPX #Yearly Opening Range #Yearly #Macro #Weekend
Let me start from explanation what the Yearly Opening Range is.
You may have read my explanation about a Month Opening Range strategy here.
The very same principle can be applied on a higher timeframe:
On the chart above you can see the Yearly Opening Range formed during the first three trading weeks of a year (that three week period has the blue background).
The red line is the Yearly Resistance, the highest price recorded during the first three weeks of a year.
The green line is the Yearly Support, the lowest price recorded during the first three weeks of a year.
During first three weeks of a year the market sets boundaries for the following 49 trading weeks.
Once the range has been set, swing traders and investors may wait for the market to break out of the range and consider that breakout or breakdown as confirmation of the prevailing trend direction.
On the S&P chart for 1972 (shown above) you can see that S&P broke over the Yearly Resistance but then came back down to that broken-resistance-turned-support line three times, in March, may and in July. Moreover, bears tried to push S&P under that red line again in October.
In each of those four instances bears failed. And each failed attempt to break under the Monthly Resistance was followed by a multi week rally.
So, we can conclude that the textbook LONG swing trading setup is a break over the Yearly Resistance followed by re-test of the broken-resistance-turned-support from above.
By the way, note that 1972 was the election year in the USA. And this 2024 year is an election year in the USA.
This week starting on Jan 15, 2024 will be the third trading week of 2024 year. This week we will complete the Year opening range and finalize the Yearly Resistance.
So far for S&P the Yearly Support is 4,682.11.
So far for S&P the Yearly Resistance for 2023 is 4,802.40. But bulls can push S&P higher this week and by doing that they would change the Yearly Resistance.
We will know the final numbers on OPEX Friday close.
Interestingly, 1999 was a pre-election year and look how well it resembles the 2023, the pre-election year:
In 1999 S&P topped in July, made a low in mid October and then rallied strongly right into the year end. Exactly like it did in 2023!
If we acknowledge that 1999 and 2023 were similar, we may assume that 2024 would resemble 2000:
You can see that in 2000 S&P made a double top on the second Friday of January (like S&P did the very last week!) and started to slide down on the third week of January. Under that fractal we should see weakness in S&P during the upcoming week and bears testing the Yearly Support 2024 = 4,682.
I can show you a couple of more election years where S&P showed weakness immediately after January OPEX Friday.
For instance, 2004 was another election year when bulls could not make any progress until November:
1992 was another election year that followed a very strong rally in December 1991:
And yet again we see that the market was in a whipsaw mode until October 1992…