Only three charts today as I’ve had a lot on this morning.
One reason I do my optic run views on my seven main US equity indices is because while SPX is often the technical leader, by which I mean not that it moves fastest, but that it is delivering the cleanest trendlines/patterns and fibonacci retracements, that is not always the case. That leader at the moment is the Dow Industrials, and my first two charts will illustrate why that is.
The rising wedge on SPX that I tweeted on Tuesday night hit the very well defined wedge resistance (tweeted at the high yesterday) and then broke down on the frankly very predictable not really news that QE3 had ended in October as planned, and the usual assurances that the Fed would be fighting hard to keep interest rates near zero until the stars fall from the sky. Now those of you who have been looking at my work closely for a while might have wondered why I was giving strong weight to a pattern on SPX that was mediocre due to the poorly defined support trendline, and the answer to that question is of course that ………. SPX 15min chart: (more…)
On Wednesday night, after some seriously wild action had settled down a bit after hours, I made some educated guesses in my trading room about what ES/SPX might do over the next few days. Some of these I also talked about on twitter then and yesterday morning. They were as follows from ES 1842-3 at the time:
1. ES was making the second low of a double bottom targeting the 1855 area (Topped at 1857)
2. That move should make the second high of a double top (target 1821 area) (bottomed 1815)
3. An (Thursday) AM low would be made on SPX in the 1830-40 ES area (low was 1828)
4. SPX would then break up from an IHS with a target in the 1920 area (pending)
5. That 1920 area would be reached on Thurs/Fri this week (pending)
6. SPX would reverse back down hard to hit the 1789 double top target (pending)
6. That double-top target would be hit Tues – Thurs next week (pending) (more…)
I was asked yesterday morning why the tone of yesterday’s post was so bearish, and the reason was of course that I thought the odds favored a significant move down. We saw that move and both the SPX 200 DMA and main double top support broke down with a lot of conviction. The double-top target is the 1789 area and I’m expecting SPX should hit that target within a few days. The trend on the market has changed for the moment and while we will get some rallies, I won’t start looking seriously for a low here until we reach that 1789 target area. I’m not expecting to be waiting long for that.
I’ve been looking at my RSI 5 / NYMO daily buy signal that triggered at the 1970 high with some concern here, as it might have delivered a stronger rally than I’m expecting, but it failed at the close yesterday, so it is no longer a concern. That was the first outright fail from the signal trigger since the start of 2007, but there’s a first time for everything. It’s not unprecedented. Looking back further I found another fail in a strong downtrend in 2002. The timing of this signal was particularly annoying, but hey, that’s the market we trade in. SPX daily chart: (more…)
Well I was saying yesterday morning that I was uneasy about the lack of a retest of Monday’s high and that there was still plenty of scope for surprises between 1935 and 1904 SPX, and we had a very impressive reversal yesterday after SPX made a marginal new low at 1925. That reversal was an amazing 45 points from the morning low to the closing highs, and brought to mind some pleasant hours I spent a while back in Las Vegas getting an adrenal gland workout at the High Roller, which at that time then sported the highest rollercoaster in the world among other terrifying rides. I was sad to read that this was all demolished in 2005, as I would have loved to do that all over again as and when I return to Las Vegas. Las Vegas – High Roller:
SPX followed through to the downside yesterday and we have now seen the opposite of the many V shaped recoveries that we have watched on SPX over the last two years. It has been a while since we have seen one of those. SPX closed back under the daily lower band, confirming the end of the rally. SPX still needs to break under last week’s low at 1926, and under that I have the 38.2% fib retracement of the 2014 rising wedge at 1912, and both main double-top support and the 200 DMA at 1904. For the full retracement scenario back under 1800, that 1904 level is the important level that must be broken. SPX daily chart: