The Inchworm Cometh

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I didn’t manage a post in RTH today, but I thought I’d use this opportunity to do an after-market post looking at the strong resistance that is (very slowly) being retested here on RUT and TF, and to review the shorter term setups forming as the market vaguely meanders towards those retests.

On RUT the original rising channel expanded by a third into a new channel. This also intersects longer term rising wedge resistance on a pattern from the 2009 low. This is formidable resistance and I’m assuming this holds until demonstrated otherwise. I’d note here that while wedges and megaphones routinely overthrow at highs, channels tend not to. RUT daily chart:

161220-C RUT Daily

On SPX the current all time high is at rising wedge resistance. That too looks pretty solid. On the bigger picture SPX is currently slightly overthrowing decent looking rising wedge resistance on a pattern from the 2009 low, suggesting that a possible bull market high from that 2009 low is forming here. SPX daily chart:

161220-C SPX Daily

The tedious action today was a retracement of the overnight ramp. That formed a clear bull flag that should deliver at least a retest of this morning’s high. SPX 1min chart:

161220-C SPX 1min

On ES this is the thrust up from the triangle with an obvious target at the retest of the all time high close above. The action so far is resolving into a rising wedge so far that is suggesting a retest and fail. ES Mar 60min chart:

161220 PM ES Mar 60min

Overall the setup here is suggesting retests of the all time highs on Wednesday on SPX and NDX, and possibly RUT, though a lower high would be ok there and is a possibility. A retest and fail at the all time highs or at marginal new highs slightly above would set strong daily sell signals brewing and, on SPX/ES, would set up double top patterns looking for the 2218 area on SPX and the 2215 area on ES on a sustained break below Thursday’s low at 2248 on SPX. The tape might be too slow to reach that target area in what remains of 2016, but my expectation is that target would likely be reached not long after.

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