Today is the last trading day of May and unless we see a really serious decline today, the monthly candles for May on NDX and SPX are going to confirm breaks above the monthly middle bands, which at the least isn’t going to do any harm to the bull case.
Shorter term SPX is still within a rising channel and is close to a test of the April high at 2111. Given that the retracement from that high was in effect a bull flag channel, that retest is the first target for that flag, and may be the second high of a double top, if SPX retraces enough after the test to break the rising channel.
I’m going to take a different tack today and examine the reasons why the stock market will just keep marching higher. The old “here’s why the market is going to fall right about now” doesn’t seem to be holding much water lately.
Before doing so, I must point out that the world right now is a contrarian’s dream (notwithstanding the fact that the market simply refuses to go lower. Ever.) Look no farther than this week’s Barron’s, which states that the market won’t crash (and I’m not making this up) for another thirty or forty years.
On SPX this is day three of a daily upper band ride. The upper band is at 2096.92 at the moment and the current intraday high has already tested that. At the time of writing ES has broken over the resistance at the 2092.75 area that has held the last two days, and if that break is sustained I have a working breakout target at 2103.25 that may well be hit. ES Jun 60min chart:
NQ has been trickling up. As with ES and TF there is a fixed 60min sell signal but it’s possible that we won’t see any meaningful retracement until the double bottom target has been hit (target on the chart). NQ Jun 60min chart: (more…)
The bulls delivered a strong confirming daily candle and tested the daily upper band on SPX yesterday. The good news for bears is that 60min sell signals have now fixed on ES, NQ and TF, with all of them looking close to starting a decent retracement. The bad news for bears is that if seen at all, the low on that retracement is most likely a strong buy, as the technical picture has now shifted heavily in favor of the bulls. I’ll explain why below.
I’ll start with the most bear friendly of the daily charts. On RUT the obvious next target is a retest of the current swing high, though the limited retracement seen so far would suggest that retest should be the second high of a double top before a larger retracement. On the TF chart there is an open IHS target at the retest of the current swing high. RUT daily chart: (more…)
As much as I’d love to pretend things are just hunky-dory, they’re not. This market has (for me, at least) really been a nightmare lately. The big picture bear tops aren’t broken (yet!) but after last Thursday, the bulls have been gaining power and momentum.
Looking at the Dow Composite, the descending channel is still completely intact, and all the up and down action over the past couple of months may ultimately turn out to be nothing more than just another pattern-within-a-pattern in the context of a generally descending market.
SPX broke back over the middle band yesterday with some confidence, and I was going to be writing this morning about the bears needing to put in a strong reversal candle today to avoid the daily upper band at 2088 becoming a strong target. As the morning high so far is at 2089 I’ll be skipping that part, and talking about the likely retracement that we should nonetheless see starting today. There is now no reason to think that we would see a strong reversal daily candle today, but nonetheless we should at least see a decent retracement and maybe more.
Where does this leave the indices on the bigger picture? Well as long as the daily middle band holds as support on the retest I think we may be about to see, then the obvious next target on SPX is a retest of the swing high at 2111. I also have an open double bottom target on NQ that I’ll be showing below that will be worth bearing in mind.