Category Archives: Bulls/Bears

Four Patterns and a Theory

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All seven of the IHS patterns that I’ve been watching since the lows last week have now made target apart from TRAN and RUT, and of those two, TRAN has come so close that if it failed here, I’d consider it a technical hit. RUT has barely made it out of the gate of course, but I have a theory about that I’ll be coming to later in this post.

I also now have decent trend patterns for this move up on five of those US indices, and passable patterns on the other two, so this move up has now taken form, and a retracement of some kind should be coming shortly.

SPX obviously made a new high yesterday, and that new high was not immediately rejected. If we see higher today, which isn’t a given as all seven patterns have already hit their resistance trendlines, then the obvious target is the daily upper band, now at 2001. SPX daily chart:

140822 SPX Daily Trendlines BBs MAs

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Bigger Picture Options

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SPX made the IHS target at 1987 and is now close to testing the current all time high at 1991.39. I’m expecting to see a new high made, very possibly today. So what then?

Assuming that we don’t see a strong rejection at the highs retest, the obvious next target just above is at the daily upper band, currently at 2000. I would very much like to see a decent retracement shortly, at the least to give me more to work with in terms of trendlines, and the obvious place to see that retracement start is now at a test of that daily upper band. On the bigger picture, if the rising wedge from the January low is still the main pattern here, then I would not expect this move to close a day back over rising wedge resistance, currently in the 2015 area. SPX daily chart:

140821 SPX Daily Trendlines BBS MAs

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IHS Update

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Another grinding day up yesterday, and the Dow IHS has also now made target. At this point, of the main US indices, NDX has made and far exceeded the IHS target there, Dow has just made the IHS target and WLSH has made the double bottom target there.

That leaves four of these main index bullish reversal patterns that have not yet made target. The first of those is the IHS on SPX. That came within six points of the IHS target at 1987 yesterday and could make that today if we have another grind up. SPX 60min chart:

140820 SPX 60min IHS

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The 50 DMA Breaks Up

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The daily RSI 5 closed back over the 70 level and my RSI 5 / NYMO buy signal has now made target, now making that 16 of the 18 such signals since the start of 2007 to make that target, with the other two failing just above 60. The 50 DMA broke up with conviction yesterday and both that, now at 1958, and the daily middle band, now at 1952, should now be strong support. The next bollinger band target is in the 2000 area and I am expecting this move up to fail under rising wedge resistance, now in the 2015 area. The pattern setup here is suggesting strongly that on the bigger picture we are making the second high of a double top before a larger retracement coming sometime soon. SPX daily chart:

140819 SPX Daily Trendlines BBs MAs

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A Day In The Life

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There’s not much to add to Friday morning’s post here really, other than we have since had a V retracement and shaken out some weak longs, so I thought I’d do something different this morning and show you what I was doing intraday on Friday, as the pattern setup was a lovely example that I’m planning to use in a book I’m (slowly) putting together.

As I’ve mentioned before, I’m on the team of the Princeton Trader trading room, led by Mike Vacchi, and we primarily trade ES intraday there, though we also trade oil, gold, bonds and a few other things on a smaller scale. I’ve stripped down the chat from Friday’s session as far as I can, though it’s still longer than I was hoping for, and will show it below interspersed with charts I posted intraday to show the evolving setup over the day. (more…)

Cross Not These Lines

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The past three weeks are simply characterized: the first two, a swift, reliable slump, and the third, a robust bounce-back which, at the end, lost its steam. It’s week four – next week – that is on my mind, because – simply stated – the market needs to re-weaken to constitute a discernable rhythm and pattern. If we get more strength next week, a lot of charts are going to get messy and much harder to interpret for bulls and bears alike. The reversal on Friday, marked below with an arrow, could be a crucial starting point.

0816-comp

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Never Play Chicken With Trains

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SPX had a strong day yesterday and broke back over broken wedge support and the daily middle band, closing at the 50 DMA. SPX has now made the 1955-8 target area that I gave on Monday morning. The daily RSI 5 closed yesterday at 67.96, close to the 70 target, and likely to make that target in the next couple of days. There is a possible reversal area there but I wouldn’t depend on that. The last four instances of this buy signal all topped out with the RSI 5 over 80. SPX daily chart vs NYMO and RSI 5:

140815 SPX Daily vs NYMO and RSI 5

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