Author Archives: springheel_jack

Working Title

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I mentioned the somewhat bearish opening setup on SPX/ES yesterday morning and that’s still looking somewhat bearish. On the bear side on SPX, though the hourly RSI 5 sell signal has now reached target, a small double top has broken down with a target in the 2276/7 area and that could be the target today. On the bull side though …….

Stan & I are starting work on the book we are writing and Stan and I both have a few pattern setups to name as we write them up for the book. One of those for me is double tops and H&S reversal patterns that break support and then fail into trend continuation. These tend to fail hard into a high probability target at the top of the failed pattern (at highs, vice-versa at lows). These happen a lot and longer term readers will recall me mentioning these many times over the last few years. My working title for these as continuation patterns is a ‘Jack In The Box’ Continuation. We may well have one of those here and, if so, that would set up the full all time high retest that we are expecting this week.

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Probability Spectra

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This is an important week on equities with likely highs coming on SPX, NDX & maybe RUT too. This high will likely last several months. There are couple of questions that I am still getting regularly that I’d like to address at the start of this week.

How certain are we (Stan & I) that our scenario will deliver here? We are not certain at all, because there is precious little certainty in the universe and none at all in the markets. We have a high level of confidence, within the obvious constraint of the reality that we are forecasting with math rather than magic. Our working assumption is that certainty in market forecasting is less common than unicorns, and that analysts offering certainty are either charlatans or delusional. On planet Earth everything is on a spectrum of possibilities.

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Almost There Now

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SPX doesn’t seem to miss many opportunities to just lie down and take a nap for awhile these days, and Wednesday and Thursday were irritatingly action free, but the thrust up from the triangle has finally got started today. SPX has come close to the ATH retest at the time of writing, and may make it before the close, but regardless of that we should see that full ATH retest and the two main options after that are either a marginal higher high and fail, or a move up to rising wedge resistance with resistance on both the large and small rising wedges currently in the 2312 area.

I’m favoring the latter option as the that gives time for both NDX and RUT to retest their all time highs as well. Either way the swing high should be in by the close on Wednesday. SPX 60min chart:

170203 SPX 60min

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You Break It, You Sell It

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Wednesday is my busiest day of the week and I didn’t manage to get a post out yesterday. I am going away for the weekend and may not manage to get one out tomorrow either, so I’m making today’s post as comprehensive as possible. Before the RTH open today I tweeted the premarket video I recorded this morning for Daily Video Service subscribers at theartofchart.net & you can see that here. If you trade USD, oil, natural gas, gold or treasuries then updates for DX, CL, NG, GC & ZB are included in the video as well.

On the 60min chart SPX confirmed a small rising wedge from the 2233 low on Tuesday and as and when that rising wedge support breaks the swing high here will likely be in. That’s been retested this morning and is holding so far. As long as that remains the case the next obvious target on SPX is a retest of the all time high. Whatever happens we are looking for this swing high by the close on Wednesday 8th February. SPX 60min chart:

170201 SPX 60min

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Ending Diagonal Established on SPX

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Our primary scenario here is that this is likely to be the last retracement before a likely swing high to be made over the next few days. At the moment that’s looking pretty good, with the retracement low at rising support from the 2233 and the low this morning has confirmed a rising wedge on SPX for this current move, and a rising channel on ES. On a break back over the 50 hour MA on SPX, currently at 2281, there would be a double bottom breaking up with a target in effect at the all time high. We’d be looking for a rejection at that retest in the second high of a double top looking for a return to the possible H&S neckline at 2233, or continuation up to rising wedge resistance, ideally to be hit in the 2310-20 area within a week or so. We’re favoring the higher scenario at the moment. This rising wedge on SPX is of course also an Elliot Wave ending diagonal, which is the ideal pattern to finish this move up.

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New Digital Digs

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The Google problem I was trying to resolve on Friday was trying to renew my primary domain at www.channelsandpatterns.com. That attempt was unsuccessful and the domain expired on Saturday. The domain now spends a few days in digital limbo where I can still renew it if Google astonish me by sorting out the problem successfully. In the meantime I have moved the blog to www.channelsandpatterns.net which, needless to say, isn’t registered with Google. More out of optimism than any kind of faith I am giving Google this week to get their act together before moving my Disqus comments over to the new domain, so for this week comments will need to be on my twitter.

ES broke down from the bull flag channel at the open last night which opened up the downside today, and the obvious support not far below at the time of writing is the backtest of the daily middle band at 2272 (approx 2267/8 on ES). SPX daily chart:

170130 SPX Daily

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