The last two cycle trend days both delivered. There is a third this week on Friday but the volume will be very low and I’m doubtful about any decent trending move. We may well not see much in the way of any moves on the equity indices before next week now.
The retracement on SPX stopped just short of a test of the important 50 hour MA. As long as that holds the uptrend is intact. If that breaks then there is a nice looking pattern setup to retest the 2043 area. Resistance is at the current high at 2097. If we see a decent break above we should see a test of 2116 next. SPX 60min chart:
Very late post today as I’ve had a very bitty day. I’m heading out again as soon as I’ve posted this so I’ll be brief.
I mentioned yesterday morning that yesterday and today were both cycle trend days, meaning that there were 70% odds on each day that either buyers or sellers would dominate that day. Yesterday morning opened strongly for bulls, and then sellers dominated the day from the AM high. Today so far has been the mirror image, with bears opening strong and the rest of the day so far being dominated by buyers.
Well, I suppose if there’s any week of the year that Turkey should be important, it’s this one: this morning’s news of Turkey’s “stabbing Russia in the back” by shooting down one of its warplanes have caused the kind of price action I like to see on the ES……..
Today was an odd combination of boring and annoying, but I managed to eke out a small profit by day’s end. The centerpiece of the lunacy early on was crude oil, which I was excitedly watching crumble last night. In the early morning hours, I glanced at my iPad, and I had a total WTF moment when I saw crude was rocketing higher based on the fact Saudi Arabia, which apparently has joined the rest of the world in believing descending markets should be forbidden, stated they would do everything in their power to reverse oil’s price slide (see arrow mark). Most of that gain unraveled not long after, but then crude gyrated aimlessly the entire day. Oil’s muddy water is even less clear now.
The rising wedge on SPX broke down on Friday afternoon and an RSI 14 sell signal fixed on the 15min chart, with an RSI 5 sell signal also fixing on the 60min chart. There is no obvious short term topping pattern yet, and we may see a higher high to form that, but a retracement looks close. If we see that retracement, then the obvious support levels are the daily middle band in the 2078 area, and the 50 hour MA in the 2061 area. SPX 60min chart:
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I was talking a few days ago about this retracement on SPX being a definitional move that would define which scenario SPX would be running into the end of the year. In order to stay on the bear scenario bears needed to avoid a break back over the daily middle band yesterday, and when that inflection point was reached yesterday afternoon the bulls broke back over that with confidence.
Does that entirely kill the bear case here? No, but it makes the bull scenario much more likely unless the bears can reverse this hard, and I can’t see any obvious reason to think that’s likely.
The bull scenario here is that last week’s retracement retested broken double bottom resistance at 2020, and is returning to make the lower double bottom alternate target at a retest of the all time high at 2134. On a break above the higher alternate target is at 2174. SPX daily chart: