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…)
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…)
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:
Oil and gas companies have been taking it on the chin recently (largely, I suppose, due to crude oil’s plunging price). We’re at an important support level now, represented by a multi-year trendline. If this line breaks, the fall is going to accelerate, because it has a well-formed head and shoulders pattern working in its favor now as well.
I called the intraday turns on Friday very well, but was struggling to believe what I was seeing. The double top target at 1985 wasn’t made, with a failure at 1990 and a push up to close back at 2007. If we are to make a new high now from that low then that would be unprecedented among the eleven RSI 5 / NYMO daily sell signals going back to the start of 2012.
Looking back further however then there is one precedent for that among the twenty four signals going back to the start of 2007, and it’s not encouraging. That signal didn’t fail, by which I mean it didn’t go as high as the highest RSI 5 peak generating the sell signal, but SPX ran up almost another 4% before making the 2010 spring high. In this case the previous RSI 5 high is lower, but if that held again here SPX might still make it to the daily and weekly upper bands, both currently in the 2030 area, and possibly a bit higher. (more…)
Another day of dramatic seeming action with only a small final move on the daily close yesterday, marking a fifth day of consolidation since SPX made the 2005 high. The channel support trendline on WLSH and the megaphone support trendline on Dow broke at the lows yesterday, so all the support trendlines from the August lows have now been broken. That could mark a high being made right here, but the prospects for a move to primary resistance in the 2020-30 look pretty good unless bears can put a whole day together and break the current sequence of higher highs and lows on SPX. SPX daily chart: