Category Archives: Energy

Bigger Picture Options

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SPX made the IHS target at 1987 and is now close to testing the current all time high at 1991.39. I’m expecting to see a new high made, very possibly today. So what then?

Assuming that we don’t see a strong rejection at the highs retest, the obvious next target just above is at the daily upper band, currently at 2000. I would very much like to see a decent retracement shortly, at the least to give me more to work with in terms of trendlines, and the obvious place to see that retracement start is now at a test of that daily upper band. On the bigger picture, if the rising wedge from the January low is still the main pattern here, then I would not expect this move to close a day back over rising wedge resistance, currently in the 2015 area. SPX daily chart:

140821 SPX Daily Trendlines BBS MAs

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Now We See

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This is going to be my top chart every day until the daily RSI 5 hits 60. Over the seventeen buy signals from this chart back to the start of 2007, fifteen made the signal target at the 70 level on the daily RSI 5 and the two failures both failed above the 60 level. As ever there’s no guarantee that this time won’t be different, but the short side is very low probability historically until the daily RSI 5 hits 60, at which point shorts will be upgraded to just low probability until it hits 70. The RSI 5 high so far on this move is just over 50. SPX daily vs NYMO and RSI 5:

140813 SPX Daily vs RSI 5 and NYMO

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Inflection Point Tests

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Yesterday was cautiously promising for a reversal at the inflection point here. The two lows this week are at 1913 and 1911, both in the 1911-14 strong support target area that I was looking at on Friday morning. We have a possible double bottom in place if the decline patterns can be broken. If the decline patterns can’t be broken then yesterday was day five of the daily lower band ride and it could run down longer and further. SPX daily chart:

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Double Top Target Hit

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I identified the rally pattern from Friday as a 70% bearish rising megaphone after the AM low yesterday and posted that on twitter. Hopefully everyone caught that. After the megaphone broke down in the afternoon there was a swift move to make the full SPX double top target at 1914, and to test the weekly middle band, also at 1914, and the 100 DMA at 1912. That is a strong support area and it held yesterday in trading hours, though given the weak overnight action it could break at the open today. SPX weekly chart: (more…)

Other Markets Update

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This is my vacation post for other (non-equities) markets. For equities check my last post from earlier today. Normal service resumes next Monday 4th August.

Last time I was looking at EURUSD I said that I was expecting a test of rising wedge support in the 1.35 area. EURUSD made that and then slightly lower to test the 200 DMA, so the rising wedge is now broken. Unless we see a fairly fast recovery to new highs I’m now looking at targets for EURUSD in the mid-120s. I’ve been watching this setup for months in the expectation that there should be a strong USD rally at the end of QE3 so I’m expecting this to resolve down. EURUSD weekly chart:

140728 EURUSD Weekly Rising Wedge and Triangle

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Testing The High Again

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That was a very pleasant change of pace on SPX yesterday, with almost a test of the high, and then a decline to test the daily middle band, and since then a recovery in the afternoon and overnight back to test yesterday’s high. Short term this puts SPX at a fork in the road.

On the SPX 60min chart there is a possible double bottom targeting the 1995 area if the current 1985 high can be broken with confidence. There is also a possible double top setting up with a target in the 1945 area on a break below yesterday’s low.

The historical stat I have been watching since last Friday suggests a test of the highs here and then a fast decline to test the daily lower band, currently also at 1945. The daily lower band is rising fast however and may well be over the last low at 1952 by the time it would be tested. That fits the stat too, as only one of the three previous instances made a lower low at the lower band touch. SPX 60min chart: (more…)