Category Archives: Interest

Support at the 50 Hour MA

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SPX didn’t make it to my minimum retracement target at 2080 as it made a perfect touch of the 50 hour MA and reversed hard there. That does tend to be solid support in uptrends until they are into the topping process and, as I was saying on Friday morning, this uptrend doesn’t look finished yet.

I am considering the possibility that a rising wedge from the October low is still forming and have drawn in that possible rising wedge support trendline in blue dotted line on the chart below. If that is the case then there is a very obvious target in the 2120-5 area at the intersection of the original wedge support trendline and the wedge resistance trendline. That is the first area of resistance that I am watching. SPX 60min chart:

150223 SPX 60min Trendlines BBs MAs

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Key Inflection Point Here …. Again

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After an incredibly whippy day yesterday the close left a very strong bull setup on SPX. This may just be a bull trap but if so, it is a very thorough and well put together bull trap, and at the least I am impressed.

The pattern setup here is a falling megaphone from the last hit of range resistance in the 12064 SPX area, and that isn’t inherently bullish here as it has already broken up and retraced 50%. What does look bullish is the possible double bottom targeting the 2069 area on a sustained break over 2025. SPX 5min chart:

150203 SPX 5min Falling Megaphone and Poss DB

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Technical Difficulties Today

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I’ve been having a few technical problems this morning with my main computer, and currently have no ability to edit charts at Stockcharts and browser access only to my main broken. I should have these issues fixed later but for now I’ll be using charts I did yesterday and a futures chart for CL.

There are clear bull & bear scenarios here and I’m leaning strongly towards the bear scenario, but with the strong awareness also that there is a huge wild card today in the shape of the Fed at 2pm, so I’m keeping an open mind.

The bull scenario is on the SPX daily chart that I posted on twitter yesterday afternoon, and that is showing that the low yesterday was a decent retest of broken falling wedge resistance from the all time high. If that low holds we would now see a break over range resistance at 2064 and at least a test of the all time high. SPX daily chart:

150127-I SPX Daily Poss Falling Wedge Retest

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Suspended Sentence

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Another day of selling yesterday, and SPX has lost over 2% over the first three trading days of 2015. This is fairly rare, having only happened eight times in the last 44 years, and it puts SPX on the clock for a possible rarer setup that would make the prospects for the remainder of the year look bleak.

Of those eight examples, three managed to close January above the close on that third day, which in this case would be 2002.61. Those three examples all put in excellent years, with the lowest rising 14.75% and the other two rising slightly over 26%. That is the SPX ‘get out of jail free card’ option.

Of the five others that closed January below the close on the third day, the best two full year performances were 1% and 3% gains, the next two lost 10% and 11% on the year, and the last lost an impressive 39% on the year (2008). If January closes below 2002.61, the historical stats would therefore suggest that the likely best case scenario would be a flat year. (more…)

Bears Can Occasionally Deliver

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It was refreshing to see the bears deliver a decent decline yesterday, with a clear fail at the retest of the daily middle band. SPX is now into the higher part of my target zone and there is now a very nice falling channel from the highs that should define the retracement. as and when this channel breaks up, this retracement should be over or ending. SPX 60min chart:

141211 SPX 60min Falling Channel

Now that the downtrend is more than just the bare minimum I would like to talk about the two main target zones here. I have two target areas within my target range, though I’ll expand that range slightly from 1995-2033 to 1990-2033. (more…)