I am kind of fascinated by this VOO chart, which is based on the S&P 500. Check out the red horizontal as well as that dotted trendline. Notice how prices are mashed just beneath them.
I was saying last week that a fill of the open gap from 2711.93, I’d be disregarding the Three Day Rule target (a retest of 2553.80). The Three Day Rule target technically hasn’t failed yet, but the first downside scenario is likely failing, and we are now left with the remaining two scenarios.
The secondary scenario is that a large triangle is forming here, and that SPX is heading towards triangle resistance, currently in the 2745 area. As triangles are to an extent a ‘Get Out Of Jail Free’ card for pattern targets, on a fail there we would likely still reach the Three Day Rule target, and I’d add this to the other two exceptions when the rule triggered while a triangle was forming.
If we do see this scenario develop then as SPX moves to triangle resistance NDX and RUT may reach their IHS targets in the 6945 and 1608 areas respectively. (more…)
Hmmm. Things are looking less sanguine in bear-land. Although the SPY gap is still firmly intact, and has plenty of cushion left:
On Friday evening, when I found out about the Syrian missile strike, I didn’t quite know what to anticipate once the market re-opened Sunday afternoon. Some folks tweeted that it would be a sea of red. I wrote that I no longer trusted bad news. My cynicism was proved correct, as the new hostilities (and increased international tensions, particularly from Russia) did nothing but goose the ES and NQ into big green numbers. They certainly had their share of swings prior to the Monday opening bell (I am typing this about 15 minutes before the regular open), losing the entire gain at one point, but we are exactly where we were Friday before the bell: at risk of cutting above that horizontal line of resistance.