Author Archives: springheel_jack

Coming Off The Lows

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A decent rally yesterday that took SPX back into a retest of the 50 hour MA as resistance. That’s currently at 2349/50 and supported by the daily middle band at 2352 and the 50dma at 2354. The current SPX low is at a possible triangle support trendline and if that resistance zone can be broken then declining resistance from the high and possible triangle resistance is currently in the 2372-4 area.

SPX 60min chart:

170418 SPX 60min

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Holiday Tape So Far

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Lower lows on ES and NQ in globex overnight and that was bearish, kinda, or at least it would have been if the lows hadn’t been marginal on positive RSI divergence that has since delivered fixed buy signals on NQ and TF, and setting up double bottoms that have now broken up on ES, NQ and TF. The breaks are marginal on ES and TF so far with NQ almost at target, and if bears are going to turn this today then it should be here at the test of the 2350 SPX area. A hard reversal here would looks for further lower lows, but a sustained break up would likely deliver the day to the bulls. All the targets and setups are marked on the charts below.

SPX 60min chart:

170413 SPX 60min

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Still Waiting For A Break

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We saw the break down to a lower low as I was expecting in the premarket video yesterday, and found support and reversed there as I suspected might happen, as the potential rising channel on TF that I was looking at before the open was established. So where did that leave the indices at the end of the day?

RUT was the strongest and broke over resistance at the 50 hour MA and daily middle band into a high testing the 50dma. That break over the middle band needs a confirming close above it again today. SPX fell away from resistance at both 50 hour MA and daily middle band. NDX was the most bearish, falling away from 50 hour MA resistance and closing marginally below the daily middle band, which had been strong support Thursday through Monday. That break under the middle band needs a confirming close under it again today.

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Signs of Life

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If there’s one thing that has really stood out over the last few months it has been the SPX tape’s tendency to just stop doing anything interesting for several days at a time. SPX has tested the daily middle band as resistance every day for a coma-inducing eight days, but I was saying in my premarket video to Daily Video Service subscribers at theartofchart.net an hour before the open that there was good reason to think that we would see breaks down on equity indices today, and we may well be seeing the start of that now. You can see that premarket video here. SPX daily chart:

170411 SPX Daily

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Failing At Resistance So Far

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This week is a holiday week and these often lean bullish but the historical stats for this week are neutral. I’d note though that the historical stats for next week are bullish.

There’s been some impressively tedious tape on Friday and today so far and on the hourly charts all three of SPX, NDX and RUT have been testing their 50 hour moving averages as resistance and failing to sustain any breaks over them.

On the daily chart the picture is more mixed, with SPX and RUT both testing their daily middle bands as resistance, and NDX testing the daily middle band there as support. SPX daily chart:

170410 SPX Daily

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Tug Of War

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After the initial decline on Monday the week has been a tug of war between bulls and bears with the bulls trying to break back up over the daily middle band and bears trying to break down through the weekly pivot. As I write neither side has a clear advantage, though the bulls have an edge just because SPX is testing resistance rather than support.

The short term setup here is promising for both bulls and bears. SPX is trying to break over the 50 hour MA and the daily middle band, both currently at 2361. If the 50 hour MA can be broken and converted to support then the short term setup is a small double bottom looking for another test of falling megaphone resistance, currently in the 2376/7 area. If SPX fails at this attempt then this is likely to be a bear flag channel forming, looking for a retest of the retracement lows and likely continuation lower. SPX 60min chart:

170407 SPX 60min

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Following Through ….. Probably

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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:

170406 SPX 60min

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