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:
2017 is likely to be an interesting year, and the tape has already shaken off the December cobwebs and is moving again. On the bigger picture the chart below is how I’m seeing SPX on the monthly chart here, and the key message is that the bull market from the 2009 low here is most likely topping out or has already topped, though that doesn’t mean that SPX will necessarily drop much in 2017. This has been an eight year bull market and if we see the retracement that I’m looking at on the chart below, then we may not see that bear market low until 2020/1. If we see that 50% retracement then that would be a beautiful fibonacci move, and should then set up a very nice long into the next bull market.
I didn’t manage a post in RTH today, but I thought I’d use this opportunity to do an after-market post looking at the strong resistance that is (very slowly) being retested here on RUT and TF, and to review the shorter term setups forming as the market vaguely meanders towards those retests.
On RUT the original rising channel expanded by a third into a new channel. This also intersects longer term rising wedge resistance on a pattern from the 2009 low. This is formidable resistance and I’m assuming this holds until demonstrated otherwise. I’d note here that while wedges and megaphones routinely overthrow at highs, channels tend not to. RUT daily chart:
There’s been a number of significant level breaks/hits over the past week and it seems timely for a longer-term chart review. Here come the weekly charts.
A lot of the charts coming up relate in some way to the US dollar so let’s take a look at that one first.
The USD chart has broken out strongly from a 2 year range. There’s no arguing with this breakout, the USD is going higher. Since a lot of commodity charts react to moves in the greenback, let’s take a look at some of the more popular ones.
Let us all bask for a moment in the ever present glow of Procter & Gamble, which must be one of the most incredible stocks of all time. In this frothy market of ours, this maker of laundry soaps and dishwashing liquid sports a P/E of about 25, which back in the day was the sort of level reserved for high-tech companies. Anyway, the great crashes of the past few decades are hardly blips in the ascent of this monster.