SPX filled the gap from Friday’s close yesterday afternoon, but there is still more to be done to confirm the low. The next test up on SPX is to break the 50 hour MA, currently at 2354 and SPX is testing that at the moment. If broken the next levels are an intraday higher high over the last rally high at 2358.92 and a daily close over the daily middle band, currently at 2367. The 2359 high is a possible IHS neckline so we could see a right shoulder retracement there. If so the ideal right shoulder low would be in the 2336 area, with the 2333-6 area being decent established support. SPX 60min chart:
Technical analysis and charting are, of course, subjective creatures. I feel very alone right now, since even among bearishly-inclined chartists, everyone is saying the bottom is in. Even our friends in Gainesville, weary, I suppose, of calling it wrong for so many years, are too timid to predict any decline more than one or two percent, and they are crystal-clear in their declaration that new highs are on the way.
For myself, nope, that isn’t the case. I’ve got 50 shorts and 50 more I want to short. Short-term, while the bulls are hugging and kissing each other from the bounce yesterday, what I see is a steady progression of lower lows and lower highs. Trump is going to fail, and, although he’s quite unaware of it, he’ll usher in the market the bears have been yearning for nearly a decade now.
A big gap down this morning from Friday’s close at 2343.98, not quite filled at the time of writing with the high so far today at 2343.79. Unless SPX fails hard here this is a strong candidate low for at least a few days, and the resistance levels I’m watching are the gap fill, then declining resistance in the 2348 area, then the last rally high at 2358.92. On a break over that I’d expect a test of falling megaphone resistance currently in the 2382 area, and on a break over that the obvious target would be a retest of the all time high at 2400.98, very possibly to make the second high of a double top. SPX 60min chart:
I can’t say I’m surprised, but ANY little weakness in this market gets gobbled right up. Below is the NQ (it’s actually gone up MUCH higher than this represents).
I am spending my weekend in Denver, so I think I’ll just share a few charts as we prepare to enter the “Repealing ObamaCare Was a Dud” market week.
First up is the Dow Composite. I’ve tinted the topping pattern, and we have a nice little shooting star candlestick on Friday.
I’ve been suffering with a bad back all week, and this has been disrupting my sleep so I’m hoping to catch up on sleep at the weekend, which I’m very glad is starting in a few hours. In the meantime ES is just chopping around waiting for nuggets of news about the progress of the Healthcare bill, which at the time of writing seems unlikely to pass today.
Yesterday’s high has held so far on SPX and yesterday’s high was of course a very obvious level for the rally to fail, so that may well continue to hold. If so SPX should at minimum retest Wednesday’s low and I’ll be watching possible trendline support now in the 2330 area. On a break over yesterday’s high there are multiple resistance levels in the 2365-70 zone. SPX 60min chart: