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…)
I’ve had a few questions about the candle stat I’ve been looking at and answered those on twitter yesterday. Only two of the reversals made a lower low at the hit of the lower band and all went on soon to make new highs. This isn’t a particularly bearish stat on the bigger picture, it is just striking that all three of the past instances of these candles going back to 1993 all then hit the daily upper band on SPY in 5 to 7 days after this rare candlestick, and then plunged to the lower band in the two to three days after that. Will that repeat again here? Who can say? I’ll be watching to see whether it does with interest though, and if it does, it should set up a decent buying opportunity there. (more…)
SPX retested the daily middle band on Friday and that held well. Now we get to the interesting part of the candle statistics that I was looking at on Friday morning, albeit with a sample size of only three similar candles over the last twenty three years. After the next day all three then moved to touch the daily upper band on SPY. One of those made a full touch and marginal higher high on SPX, and the other two touched the upper band on SPY but fell short of the touch on SPX while making lower highs. What was the really interesting part though, is that after each tested the daily upper band intraday, all three then fell hard to test the daily lower band on SPY within three days. It will be very interesting to see whether that is repeated here. (more…)
Bears put a strong day together yesterday and broke down below the 50 hour MA. Shortly before the low I tweeted a confluence of strong support levels in the 1957-60 range, and the low was at 1959.46. The key support level here is the SPX daily middle band at 1957, and only a closing break below that would open up lower targets at the daily lower band in the 1930 area and the 50 DMA at 1921. The last two significant lows were at 1945 and 1926 and both of those are potential H&S necklines of course. SPX daily chart:
Now that primary channel resistance has been broken. I’ve been considering the upside targets that are now in range as a result of that break. The first one is rising channel resistance from the 1814 low, and I have that currently in the 1995-2000 area. That looks like the obvious next candidate for a short term high area as I can’t see any reason here to think that the current high might hold more than a couple of days. (more…)
SPX tested the daily middle bollinger band yesterday and as with Wednesday, there was then a sustained rally to a lower high (so far). The SPX daily middle band is obviously a significant support level, but there should be more downside coming if the bears can put a whole day together. SPX daily chart:
I’ve had quite a few new readers in the last few months and it struck me yesterday from a couple of comments that at least some of these were obviously still hazy on the distinction between technical analysis and fortune telling. It can be an easy mistake to confuse the first with the second, as a good analyst can sometimes make calls that seem almost supernatural. Some of my past calls have been amazingly and rapidly accurate, and some offhand examples I’d pick would be: (more…)