Today is Thursday December 1st, 2011 and the Stock Market Hits A Wall as we ran into that overhead resistance I talked about in my last blog post.

A very decisive moment is coming within the first 2 hours of tomorrows session. If we break 1241 on the downside, I think we will see a lot of selling coming in. If we break the 1250 level, we could see a continuation of the recent rally. It would be more normal for the market to pull back for a few days before trying to attempt to break today’s highs and with that we will have to wait and see.

Overhead resistance is when the market has reached a point on the charts where sellers have overtaken the buyers to such a degree that it has to go down. There is no buyers at the asking price and the adjustment downwards quickly comes in to reflect the lack of interest at those levels. Today, I am sure that the protective stops have been place just above today’s high in an attempt to sell the market and profit on the downward move. The protective stops are regular buy orders that will trigger open market orders to buy if the price were to breach today’s highs. Many have placed there orders and will wait for a sell off to profit on the downside. They have positioned themselves for a longer term play that could last 1-3 days. If they are right, a big pay off will await, but if wrong, there stops will act like fuel for a continuation to the rally as they will be buyers in the open market which will add and or trigger additional stops at higher levels.

That is what we saw in the almost 500 point Dow move the other day. It happened in the night session where the volume is lighter and easier to push the prices in one direction or another. A chain reaction happened pushing prices up and up until it reached an area that it could not overcome and that was early on in today’s session.

It would be move normal for the market to pull back and work off some of the exuberance from the last few days, but we will have to wait and see. A very nice setup has been put in place with today’s price action and it is very clear to see. How the market will react in the opening hours of tomorrow session will give the insight into the next move.

A move back down to S&P 1200 would normal and natural and believe that will be the expected target if the break is to the downside. After hitting 1250 in today’s session and currently at 1243 that is a big move.

On the other hand, if we move up over the 1250 area with conviction, it could trigger the buy stops by those position traders and will add lots of fuel to push the market still yet higher. As mentioned, time will tell.

In today’s trading, I did not have a good day. It happens and today was one of those days. I was just plan off all the way around. I had three small losses and hit my daily loss limit for the day. The trades and screen shot are below.