Category Archives: Bulls/Bears

Nowhere To Run To

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The bulls put in a very strong day yesterday and that has most likely put SPX on the 25% highs retest path, though the market has been so whippy lately that I’d like to see that SPX holds 2110-8 this morning to be sure. On the stats I gave last Friday one of these made a marginal new high that was the second high of a double top, and the other continued the previous uptrend. .

In truth these are almost a single option here, if only because resistance on the rising channel from the 2012 lows is now in the 2190-220 range, so unless that resistance could be broken, which historically is most unlikely, then headroom here is too limited to continue an uptrend for long.

If we are looking at the highs retest option then the obvious resistance levels are at the current all time high at 2134.72, the daily upper band at 2141 and the weekly upper band at 2153. The RUT chart is favoring the lower targets and the higher target would be a near perfect retest of broken support on the rising wedge from the October low so that has some appeal too.

If we see the continuation option that we would most likely punch through the weekly upper band (weekly close basis). if so I’ll roll out the stats on these punches as strong indicators for an imminent top.

The 15min and 5min buy signals that I mentioned yesterday morning have both made target and a 5min sell signal fixed at the close yesterday, so I’m favoring an AM low today. SPX weekly chart:

150528 SPX Weekly Patterns BBs MAs

SPX daily chart:

150528 SPX Daily Patterns BBs MAs

As long as bulls can hold support this morning then we should see the highs retested. If SPX breaks back below 2110 then yesterday was most likely a bull trap before a resumption of the downtrend. Neither option significantly changes my forecast for what we are likely to see over the rest of 2015.

patient_bear

A Decent Start

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That was a decent decline yesterday, though ideally bears should have controlled the close and they didn’t. The minimum requirement on all the various sell indicators that I was looking at on Friday and yesterday morning were met as the 15min and 60min sell signals made target, the RSI5/NYMO sell signal made a visual hit just shy of the 30 level at 31.54. That was a very near miss and I’d count that as close enough, so that is effectively made though usually we would see a close under the 30 level and we’ll most likely see one here as well.

In terms of the stats I was looking at on Friday for series of bearish reversal candles the minimum requirement of a 1.65% decline was met yesterday with move of 1.665% from the all time high into yesterday’s low. Of the nine examples that I listed, two reversed back up to retest the high after that decline, of which one continued the previous uptrend, and the other made a marginal new high before a 9.83% decline from that second high. Six continued down without a retest of the high to a median decline of 4.5% to 5% from the high, and an average (mean) decline of 15%. The odds therefore favor continuation down without a retest by three to one. We shall see how far the bulls can rally today.

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On The Road to 1820

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A daily RSI5 / NYMO sell signal fixed at the close on Friday, and this is a very high performance sell signal. I think the hit rate for this signal is 75%+ and I haven’t updated the statistics today as the last six RSI5/NYMO buy or sell signals on the chart below all made target (the 30 level on the daily RSI 5), so the stats certainly aren’t getting worse. This daily sell signal joins the 60min and 15min sell signals still open from last week. SPX daily chart:

150526 SPX Daily Rising Wedge and RSI5_NYMO Signals

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Chop Top

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I’ve been doing more work on the series of bearish reversal candles over the last twenty years and have combed through 90% or so of the intervening period. I’ll finish that at the weekend and may do a dedicated post on these. The ones I have found so far are:

1999 Feb – From 2nd candle into 5% decline
2002 Dec – From 2nd candle into 17.3% decline
2004 Dec – From 2nd candle into 4.46% decline, then marginal higher high, then 7.56% decline
2005 Oct – From 2nd candle into 2.08% decline
2005 Nov – Failed and resumed uptrend into December interim high
2005 Dec – From 2nd candle into 4.44% decline
2007 Oct – From 3rd candle into 57.4% decline
2014 May – From 2nd candle into 1.66% decline
2014 Sept – From 2nd candle into 1.65% decline, then marginal higher high, then 9.83% decline
2015 May – To be determined

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