I’ve been mentioning that TF/RUT has been forming some kind of bull flag that should deliver a retest of the all time highs on TF/RUT, and that bull flag is a clear falling megaphone flag on RUT that underthrew bullishly yesterday morning and broke up this morning with a minimum target at a retest of the all time high on RUT at 1514.94. The all time high on TF was made outside RTH and is slightly higher in the 1518.40 area. I’d expect both to be tested before any serious reversal. RUT 60min chart:
Other than on asian markets, there is a lot of negative divergence on US and european indices on the weekly and daily charts now, with the first of those fixing on the RUT and FTSE daily RSI 5s this week.
SPX has possible daily RSI 14 and RSI 5 sell signals brewing, one half decent red daily candle would likely fix both signals. SPX daily chart:
Obviously the bears have had serious issues achieving anything recently, and yet again today they have delivered their signature matching lows at the current lows of the day, but there is a decent chance that there is at least some more retracement coming in the next day or two, with all of the hourly charts on SPX, NDX and RUT currently on RSI 14 sell signals. I’m not expecting anything impressive, and the structure here is suggesting that will be at least one more leg up after that, so if seen this larger retracement should be a dip buying opportunity into new all time highs on SPX and NDX, and possibly on RUT as well. (more…)
As far as I’m aware the only nonsense word from Lewis Carroll’s Jabberwocky to make it into general usage was ‘galumphing’ a wonderful word evoking something large and ungainly achieving speed without grace. Still a favorite word of mine, though not one I get a chance to use often.
NDX has reversed back up on a setup I show on the NQ daily chart below, and the obvious read is that NDX is galumphing back to a retest of the all time high, though NDX still looks heavy and might fail to deliver on that.
In the meantime SPX delivered a higher high and the possible daily RSI 5 / NYMO buy signal that I was hoping to see start brewing on a higher high is now brewing, and should fix as an when this move up tops out. SPX daily chart: (more…)
The swing high may be in, and price has a couple of decisions to make early this week to show us whether that is now the case. All charts were done either yesterday (RTH charts) or before the open this morning (futures charts) for subscribers at theartofchart.net.
SPX is on an hourly RSI 14 sell signal, and short term rising wedge support was tested twice and held as support on Friday. That has broken this morning, and subject to any short term topping process the next big trendline target is larger rising wedge support, currently in the 2455 area. SPX 60min chart:
Stan and I are doing the first of two ‘Trading Toolbox’ free educational webinars an hour after the close today at theartofchart.net, and this one will be looking at the use of bollinger bands in day and swing trading. If you would like to attend then you can register for that on our September Free Webinars page.
After an interesting start this morning ES settled down into the comatose tape that has been characteristic of afternoons recently. The morning was definitely interesting though, with the ES rising wedge support that was tested perfectly at the low yesterday breaking this morning. That hasn’t followed through yet, but may follow through soon, ideally after just one more all time high retest. ES Dec 60min chart:
If you don’t immediately recognise the title for today’s post then I must first warn you that your knowledge of Lewis Carroll’s literary works is dangerously deficient.
So why am I thinking of Alice in Wonderland today? Well it is Fed day, and for me the Fed always bring Wonderland to mind. I was talking to my older son a few weeks ago explaining that in the same way that lawyers trained for years to achieve a state where they could swallow (figurative) camels and yet still strain at gnats, economists went through a process where after years of patient study that seemed to require at least a PhD, they achieved a state where measures that looked reckless or even suicidal to the less trained eye were revealed as both sensible and necessary.
He asked whether the Fed’s track record at steering the economy in the past was impressive, and I told him that it had delivered a succession of ever greater disasters over recent decades. He then asked why people still nonetheless trusted the Fed to deliver policy, and I replied that people had to believe that the Fed knew what they are doing, as the alternative was just too terrifying. I added that the Fed never admitted to making a mistake, which reassured many, and that Ben Bernanke had an impressively bushy beard that had inspired confidence, though Yellen had needed to manage without one so far for technical reasons. (more…)