Stan and I did a webinar on fibonacci retracements and extensions last night at theartofchart.net, and if you would like to see the recording you can find that here. That’s looking very topical this morning as I was showing a number of fibonacci retracements on various timeframes there, and on the ES & TF charts that I did for Daily Video Service members after the webinar, I was talking about the fib retrace levels that ES & TF hit at the lows yesterday. You can see yesterday night’s comments on the charts below of course.
On ES the rising channel broke down in the morning and the LOD was a 50% retracement of the channel. I mentioned that this was a very possible place to start the last leg up if ES could convert the weekly pivot at 2264.75 to support and that’s looking good so far this morning. No ATH retest yet but getting closer. ES Mar 60min chart:
Boring tape so far this week but the interesting news yesterday on ES was that a rising channel was established from the 2227 low. Channel support is now at 2260.75 and a break below would be bearish. All of ES, NQ & TF are now on weak 60min buy signals, so my lean is that channel support holds and ES has a decent chance of making the all time high retest today or tomorrow, though the tape this week so far has been memorably dull. ES Mar 60min chart:
Another day of bumping round slightly above the daily middle band so far. A retest of the high is really just a few handles away, but much of the last few weeks have been spent watching SPX repeatedly fail to retest the all time high at the time by a few handles. There’s a nice short term setup on ES to deliver the ATH retest but it remains to be seem whether that will be enough to get us there this week. This may just continue to kick around until after the Inauguration.
As and when the high is made, SPX is due a minimum 3.9% retracement from the punch over the weekly upper band a few weeks ago. That should get SPX much of the way back to rising wedge support, currently in the 2155 area. SPX daily chart:
SPX and NDX made new all time highs on Friday, and the minimum requirement that we were looking for in the high that is forming here has been met. There is a setup for sharp retracement from here, though it’s very much still in the inflection point still, and I’ll be showing you on the last chart why I think the setup favors the bulls, though it could very much go either way.
On the SPX chart there is now a daily RSI 14 sell signal brewing, with NYMO divergence and SPX close to rising wedge resistance. SPX daily chart:
I was saying on Wednesday last week that ES, then six handles under the all time high, was deceptively close to the all time high, and that was because ES was already making heavy weather of getting through to retesting it. Nine days later ES is seven handles under the ATH at the time of writing, and has been kicking round in this area for a couple of days while we are still waiting for that retest.
The pattern setup here for delivering that retest is good, and the falling megaphone that has formed over the last few days is a likely bull flag that should deliver it soon after the break of megaphone resistance, which was tested again on the NFP numbers this morning but again wasn’t broken. A break over 2268 today would be a clear break. It would be nice to see that break today. ES Mar 60min chart:
It’s been an interesting year on equities this year, with plenty of thrills and spills, and with some extremely dull periods where volatility almost vanished. Not the easiest year to trade, but generally something interesting happening, even if that was only a record-challenging period of very little volatility like the one we saw in the summer.
There were some big surprises over the year. the UK voted to leave the EU unexpectedly and the expected equities meltdown that the financial news had been talking about endlessly only lasted a couple of days. Donald Trump won the Presidency unexpectedly, and the expected meltdown that the financial news had been talking about endlessly only lasted a couple of hours. What did this mean? Mainly that watching the financial news is generally a waste of time, but most of us already knew that.