I always enjoy using literary, philosophical or other references in the titles of my posts when I’m not summarising the central theme of the post in it, and this post narrowly escaped being entitled ‘The Curious Incident of the SPX in the Daytime’, before I decided that the central message of this post was too important not to be used as the title. The title would have been a reference to a quote from the famous Sherlock Holmes short story ‘The Silver Blaze’.
The point is of course that while NDX/NQ did almost exactly as I predicted in my post last night, reversing in the right area back to the retest of the daily middle band on NDX, closing a handle below it, SPX/ES and RUT/TF were left at the starting gate, both closing not far above the lows for the day. What does this mean? Well at the least it means that the possible extension higher that I was looking at on SPX/ES if NDX/NQ now breaks up towards the all time high retest is now unlikely, and if NDX/NQ breaks up here then I wouldn’t be looking for more than an all time high retest on SPX/ES, and likely not even that on RUT/TF.
Hey Slopers! Here is my quick view of how I see $SPX right now.
We have had a almost non-stop rise since November, but I am seeing
the possibility of rising volatility for the rest of the summer.
We all know what happened to Tech last Friday and I believe that was
warning to the rest of the markets.
I have one of my favorite indicators with a fairly big divergence forming and
about to roll over. On top of that this rising wedge has narrowing price action.
We have violated the bottom trend line a couple of times already.
My thought is we are about to have a breakdown back into a big broadening triangle.
Obviously we can continue going up but here is my road map if we go below 2415 SPX.
With little support I do not think a retest of the lows in November are out of the question.
It is there that I believe would be the last great buying opportunity of this bull market that
could take it higher than most believe. 2016 marked the bottom of a 7 year ongoing cycle
in the markets. If correct we have 2-3 years left of the bull market and could see big
Happy trading Everyone!
Yesterday’s setup favored the bears on the backtest of a cluster of resistance and fibonacci levels on NDX, today’s lows on SPX and NDX have so far been marginal higher lows against the current retracement lows and that has me wondering about possible triangles forming here.
There is now a very decent looking double top setup on SPX that on a sustained break below 2415.70 would look for 2384/5. That is in a strong support range which I have detailed in the notes on the chart. SPX daily chart:
Since I posted my article of May 28 regarding the five FAANG stocks, we’ve seen some profit-taking in all of them over the past week, most notably in Netflix (NFLX), as illustrated on the 1-Month and 1-Week percentages gained/lost graphs below.
I was saying on my twitter at lunchtime that the 70% option was a fail at weekly pivot resistance and the 50% retracement level on the NQ chart, and that duly delivered after a slightly nonplussed pause after the FOMC rate rise at 2pm as the market tried to work out whether such a heavily trailed announcement qualified as news and, if it did, whether such expected news could really be a credible reason for markets to react to it. Honestly I have no idea what the answers to those questions might be myself, but the setup favored the bears regardless and duly delivered the reversal at obvious resistance.
Key trendline support on the NDX charts is megaphone support currently in the 5650 area, and the near miss at the last test is suggesting strongly that will break on the next test. NDX 60min chart:
The decline on NDX on Friday was over 4% high to low intraday, and that was the most powerful one day decline that I’ve seen on an equity index in some years. I was talking on Thursday last week about the resistance trendlines on NDX and AMZN still being in doubt, and both were nicely clarified at Friday’s high. I also mentioned in that post that before the swing high that we are expecting here Stan and I would ideally like to see new all time highs made on all of SPX/ES, NDX/NQ and RUT/TF, and we saw all of those made before the reversal on Friday. This is a high quality candidate swing high here, but I’m just going to talk about NDX/NQ today as that has been driving the equity bull bus this year, and is the most important place to see high quality highs being made. (more…)
My apologies for the lack of posts so far this week. I’ve not been feeling great and it’s been a struggle just to keep up with my daily output for subscribers at theartofchart.net. Planning to resume these posts on a daily basis from this post today.
Last Friday NDX/NQ broke a strong resistance trendline, and that has opened up higher targets, not so much on NDX/NQ, though I have a longer term resistance trendline on NDX in the 6000 area that I will definitely be watching with great interest if reached. NDX 60min chart: