I had a very busy day yesterday and didn’t manage to get a post out. Hopefully some of you caught my premarket tweet which captured the day nicely:
So what about those lower lows, which we haven’t seen yet? We the pattern setup is clear enough, with a small rising wedge that formed from the 2328.95 low and has broken down with a minimum target at a retest of 2328.95. To get there however the possible triangle support would have to break, and that’s at 2331 and hasn’t broken yet. While that triangle support holds SPX may still be returning to triangle resistance, currently in the 2371-3 area. On a break below that triangle support the downside opens up, and SPX can go considerably lower.
Resistance on the daily chart is clear at the daily middle band and 50dma, currently at 2352 and 2354 respectively. While those hold as resistance the overall trend is likely to be down. I would mention though that RUT broke back above the daily middle band yesterday and a confirming close above today would be bullish, and that NDX gapped over the daily middle band yesterday morning and traded the whole day above it. The NDX close wasn’t a clear break over the middle band, but both RUT and NDX have traded the day so far above their daily middle band and if they can hold that into the close that would be bullish for both. SPX daily chart:
SPX also needs at least some downside today to avoid bullish looking breaks. the 50 hour MA is currently at 2345 and has been resistance so far this morning. Any break above needs to fail, and the the important 5dma, which has held on a daily closing basis for all of the last eleven trading days also needs to hold today, and is currently at 2339. If bears can’t break below triangle support on SPX today or at latest tomorrow morning, significant bullish resistance breaks are almost inevitable. Unusually for the bears they’ve managed to maintain overall downward pressure over the last three weeks but they really need this consolidation move to break down. SPX 60min chart:
On ES there is a possible upsloping H&S forming here and the ideal right shoulder high would be in the 2346 area. Stan is looking for 2348 as main resistance that needs to not be converted to support to avoid a bullish break. I’ve been looking at 2350 so 2348-50 looks like main resistance today. ES Jun 60min chart:
NQ has reached the first obvious target at the retest of yesterday’s high. On a break higher trendline resistance is currently in the 5440-5 area. The obvious fail area for today however has already been reached. NQ Jun 60min chart:
TF has also reached the obvious first target at the retest of yesterday’s high with the monthly pivot and likely triangle resistance. Again this is even more obviously the reversal area if TF isn’t going to break up, and that’s holding so far. TF Jun 60min chart:
If this was a bullish setup my confidence that the setup would play out would be very high. Even as a bearish setup, with the bears having had so many performance issues over recent years, I’m favoring resolution down as the 70% option. The 30% option is a break up towards possible resistance in the 2371-3 SPX area. We’ll see.
Stan and I are doing a free public educational webinar at theartofchart.net an hour after the close tonight and if you’d like to see that you can sign up for that on this page here. The recording for our public Big Five webinar last Thursday on AAPL, AMZB, FB, NFLX and TSLA is posted on the same page and well worth watching if you trade any of these. There is also a 30 day free trial available for that service on this page here.