3 Jan 2022, 11:00
The Year of 2021 ended with a bang as we see a bullish pattern forming on the S&P 500 Index. An ascending triangle is seen on the chart. We have broken above the brown resistance line and could see a retest back to this line. Now, if we see a rebound off this line, then there could be further upwards movement in the next few months as the bulls continue their positive momentum into the start of 2022.
Thus far, the Santa Claus rally is still going strong. As long as the index does not end below the brown line by the end of Tuesday, we would officially confirm a Santa Claus rally. If a rally does take place, 2022 could be a strong year as well. But if the index dips back below the brown line within the next few days, there is no Santa Rally and bears may take control in the year.
As inflation continues to rage uncontrollably across the world due to supply chain issues, this may be weighing down on the year’s economic prospects. Hence, until the there is a Santa Claus Rally confirmed, there is still a chance the bears may seize the reins. This could send the index below the brown line and dip back to the black channel line instead. Therefore, we need to watch out closely to see how the first week of the year plays out before we anticipate how the stock market could look like for the rest of the year.
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