Yesterday was a very interesting day and in the end delivered a second failed attempt to break over the daily middle band on SPX and a very bearish daily candle that may have opened up the downside. Needless to say that candle requires confirmation, and we are still waiting to see whether bears can deliver that.
I won’t show it here but the rally from the lows on SPX has delivered a perfect rising wedge back to the 50% retracement and that rising wedge has broken down. That is a clear bear flag setup that should deliver at least a retest of the low at 2348.90, and likely lower. If the bear scenario is playing out then the high today at 2364.16 should hold, barring a possible retest to make the second high of a double top. On a break with confidence above the odds of the bears dropping the ball badly here will increase dramatically.
On a continuation down below 2348 there are two possible support trendlines that I’ll be watching. The first is a possible triangle support trendline in the 2340 area, and the second is falling megaphone support, currently in the 2300 area. SPX 60min chart:
Resistance today on the daily chart is at the middle band on a daily closing basis. that’s currently in the 2362 area and another fail there opens the daily lower band as a target. That’s currently at 2336, and a decline to 2300, if we see it, would likely be fast and involve a two or three day lower band ride. SPX daily chart:
ES is holding the obvious resistance at the monthly pivot on an hourly closing basis at the highs so far today. ES Jun 60min chart:
NQ is holding the obvious resistance at the backtest of broken rising wedge support at the high so far today. NQ Jun 60min chart:
TF has rallied through the first obvious backtest of the broken H&S neckline at 1361 and may need a test of double resistance in the 1368-70 area. On a break over 1370 the odds of a resolution that would please the bears would drop considerably. TF Jun 60min chart:
I like the falling megaphone support trendline test, currently at 2300, best and would have an eye on the 38.2% fib retracement of the rising wedge from the Nov ’16 low in the 2280 area. Before the bears start gathering at a mountaintop to await the apocalypse however, I’d note that the obvious bigger picture read on this falling megaphone would be that it is a bull flag forming that, on a break up, would have a minimum target at a retest of the all time high. This decline is likely to be more of an intermission during an ongoing topping process than the main decline.
I had a suggestion from a well known annoying douchebag yesterday that I had stopped doing my posts before the market open every day because I was waiting until the direction of the market is clear every day before doing them. Frankly I doubt that would actually be much of an advantage, but the reality is that I publish futures charts on eleven instruments before the open every day and record a video running through the setups on those. I am often still adding written notes to them for an hour after the open. Those are all produced for Daily Video Service subscribers at theartofchart.net, and I’m then running a private twitter feed for those subscribers during trading hours.
Just by way of example you can see the tweets I posted at the highs yesterday here, the first high today here, and the second high today here. If you’re interested in seeing more of what we do at theartofchart.net then there are 30 day free trials available on this page here.