A big news day today with Janet Yellen talking about the Fed’s future plans to improve the stability of the financial system. Doubtless she will once again be reaffirming the Fed’s complete commitment, having dug a vast economic hole with overly loose monetary policy and low interest rates since Greenspan’s appointment as the Fed Chairman almost thirty years ago, to keep on digging using the same tools until that hole has entirely disappeared. Obviously we should all hope that the Fed’s efforts doing that in the future are more successful than they have been in the past.
Stan’s on holiday this week (as well as last week) and I’m minding the shop at theartofchart.net, so I’ve been more underwater than usual. I try to get these posts out in the morning but that’s not always possible. Apologies for this particularly late one.
Bears had a good day yesterday and the marginal swing high that I was looking for was not made. Does this mean that this seemingly eternal topping process is finally done? Well no, but it’s a step closer to finished. As I mention regularly, there’s no hurrying these things and topping processes particularly can test the patience of even the most experienced traders. It’s coming, and coming soon, but there’s still more to do as I’ll show below.
Yesterday started off as expected, but the move down stalled at the daily middle band, and then that held on repeated tests for the rest of the day. I was saying last night on the daily video update for subscribers at theartofchart.net that the support there three of the last four days was favoring a retest of the daily upper band at 2194/5 next, and that the possible H&S patterns forming on SPX, NDX & RUT were now much less likely to deliver. On a retest of the ATH, which we are seeing now, then I’d be looking for a marginal new all time high in the 2194-2200 range, that should not break the resistance trendline now at 2200. I would expect that marginal new high to be the swing high for the current move up, and for that to hold for three or four weeks. SPX daily chart:
There’s an interesting setup on the SPX 15min coming into this week, with the possible H&S patterns that I was proposing last Tuesday morning still forming on all of SPX, NDX and RUT, but with a possible alternate falling wedge forming on SPX. Either way the obvious next move would be a test of the H&S neckline / possible falling wedge support in the 2166/7 area. At that point we should either see a fill of the open breakaway gap into 2164.25, or a reversal back up to retest 2193 to make a likely second high of a double top.
All charts from the charts I did at the weekend for the Trader’s Chart Service at theartofchart.net. Further notes on the charts as usual.
SPX 15min chart:
SPX went a bit lower than I was expecting yesterday morning but held breakaway gap support and we have then seen the rally to retest the 50 hour MA from below that I was looking for. That’s holding so far and if that remains the case then on a fill of that breakaway gap support art 2164.25 then I would have an H&S target in the 2142 area, not far below the possible larger H&S neckline in the 2147/8 area. If the candidate island top gap above at 2190.15 fills then I’d expect a marginal new high that should respect trendline resistance slightly under 2200.
I’m using charts that I did yesterday night for subscribers at theartofchart.net. SPX 15min chart:
SPX hit the 2172 target I gave yesterday morning and has traded as low as 2168.5 at the time of writing. This area may hold, and if so the obvious rally target would be the left shoulder high at 2187/8, with important resistance at the 50 hour MA currently at 2182/3. If SPX was to fill the open gap at 2190.15 we would likely see a marginal new high, probably at or under 2200. If SPX fills the open gap just below at 2164.25, then that opens up the next decent support level and possible H&S neckline at 2147/8. SPX 15min chart:
SPX went and tested possible smaller rising wedge resistance in the 2194 area yesterday and with the break below that rising wedge support this morning, that is now a candidate swing high. SPX 15min chart: