SPX made a new high yesterday and closed at 2011.36, only 0.13 over the daily upper band which closed the day at 2011.23. The bears had plenty of time to knock the market down after a new all time high was made in the morning, and failed to do so. The odds that we are starting an upper band ride on SPX improved sharply yesterday.
It’s a struggle to remain objective at a time like this because the last couple of years have conditioned us all to dismiss any bear case at the first sign of trouble, and I’m struggling not to just do that here. The odds of a bullish resolution here are definitely improving, but that’s not a done deal yet, and the stats from my SPX daily RSI5 / NYMO sell signal particularly are warning that we could still see a bearish resolution here, though if we are to see that we would need to see some significant weakness today or at latest on Monday. (more…)
SPX touched the daily upper band at the high yesterday and also tested the 50 hour MA at the low, so the two key targets that I gave yesterday morning were both made. So what now? Well I’m still looking for a (hopefully marginal) new all time high, so I’m looking for at least one more test of the upper band, but once there SPX is at a fork in the road and I’m going to talk about the bull and bear scenarios there.
The daily bands are pinching sharply here and that means that there is a very high probability that SPX is shortly going to start either an upper or lower band ride lasting at least three days and possibly much more. I’ve marked the last four daily band pinches on the chart below. The direction is unknown though the odds I gave yesterday of a downward resolution here at 2 to 1 is where I see the odds of the band ride here as well. What this means in practical terms, given that SPX tested the daily upper band yesterday, is that if we now see a strong new high, then this is most likely resolving upwards. (more…)
SPX broke back over the daily middle band and the 50 hour MA yesterday, and just to underline the point, Dow broke over the 50 hour MA and managed a new all-time high. The falling channels on NDX and NYA also broke up hard. The retracement from 2011 should be over and we should see a retest of the SPX all time highs in the next few days.
So has this RSI 5 / NYMO sell signal failed now? Not yet. Of the 29 previous signals back to the start of 2009, a full nine of them reversed back up to a new high before then making a lower low. One of those signals then failed and eight made the RSI target. As there were only four other failed signals, that gives better than two to one odds here that a new high on SPX would be followed soon after by a low under the retracement low at 1978. Given that nice looking double top setups are forming here, we may be looking at a marginal higher high coming, and then a deeper retracement into the 1940s and very possibly further. (more…)
The SPX daily RSI 5 closed at 32.79 yesterday, and the retracement is now larger than two of the past 29 signals since the start of 2007. SPX has reached a level where a low wouldn’t be an extreme statistical outlier. This isn’t a false signal that is part of a larger sell signal forming however, so once I strip out the four of those, then 20 of the remaining 25 signals made it to the target level at 30 on the RSI 5. This retracement may well make it there as well.
There is something else to consider as well. SPX has broken below the daily middle band, and confirmed that break by holding below it yesterday. When this happens then there will be a test, most of the time, of either the daily lower band, or a significant moving average. My eye is drawn to the daily lower band at 1976.62, and the 50 DMA at 1972.56. Both of these are decent targets for any further move down. SPX daily chart: (more…)
I was saying on Friday morning that the bear case shouldn’t be written off yet and, well here we are. The bounce failed at the 50 hour MA and SPX made a new low, closing well below the daily middle band.
In terms of past RSI 5 / NYMO sell signals the situation is improved as the decline is now larger than two of the 29 sell signal declines back to the start of 2007, and I’d also note that SPX and Dow also made the 38.2% fib retracement levels at the low on Friday, if this turns out to be a wave 4 retracement. (more…)
Time for a quick qomment qleaner, particularly given some of the high drama going on amongst Slopers in the prior thread.
I’m pleased to see the ES and NQ a deep shade of red right now; my 130 (yep, 130) shorts would appreciate that kind of continued color, to say nothing of my 16 long put positions. This is going to be a hell of a week, folks – – buckle up.
For the third straight day SPX tested the daily middle band, pinocchioed below it, and closed well above it. My RSI 5 / NYMO signal stats notwithstanding, if the bears can’t break below the daily middle band then this retracement has most likely bottomed out and we are on the way back up. SPX daily chart: