Amidst all the hoopla over another positive year, it would be wise to consider that COMP has reached potentially important overhead resistance.

continued for members…

First, a quick update of ES and SPX…

VIX’s collapse was largely responsible for the latest bounce. But, note that VIX itself bounced on a very obvious TL and is up over 7% on the day.

Now, back to COMP. Note that it has followed the rising white channel pretty religiously since 2008. If it hadn’t been for the response to the COVID crash, it would have remained below the midline of this channel – meaning that the channel would be only half as wide.

As it is, it’s back below the midline and has reached the 1.618 extension of the purple Fib pattern.

It experienced a pretty strong reversal (23%ish) when it reached the white 1.618 in 2018 (though, after pushing slightly past it and taking an entire year to backtest the 1.272.) But, it practically ignored the purple 1.618 in 2013.

We’ll take the proposed channel top with a grain of salt only because of COMP’s 1998-2000 blowoff top.But, this Fib level – the 1.618 at 19,996 – resulted in an actual high of 20,204. And, we know that markets love nice round numbers.  The fact that it’s back below 20,000 and the Fib seems significant.

It’s also worth noting that it reached those all-time highs on pretty obvious negative divergence.

COMP already backtested the Nov 2021 highs – also pretty close to the white 3.618 and a tag of the SMA200 – so a pullback here could be less significant. But, history suggests a drop to at least the purple 1.272 at 17,877 (quite close to the white 4.236 at 18,154) for a 10.75% total pullback. The SMA200 should reach this level in mid to late-January, so we’ll estimate the target at 17,877 around 1/16 – the day after December CPI comes out. Since COMP is so close to the purple 1.618, it makes playing a directional bet with tight stops pretty easy.

GLTA.