It can be difficult to identify the pattern for an advance or decline, though at the least it is usually clear in retrospect. Sometimes, as with the move up from 1820, it can be hard to identify even then. This retrace hasn’t been as hard as that, but has been a tough road to identify with these fast whiplash moves and a total of three decent falling channel candidates having established so far. The first that I posted yesterday broke up in the morning, the second had me looking for another two handle move up from the intraday high that never came. The third one however was clear by the end of the day, and with the quality of the trendline anchors and fit so far I’m very confident this is the correct one.
I have channel support in the 2013 area at the moment, declining obviously, and we have see channel support hit this morning. if we see a break below then I’ll be treating that as this channel breaking down, possibly evolving into a falling megaphone, and I’m not sure where the next support above 1998 (50 DMA) might be. Unless we see that break I’m a buyer at channel support, though we may well see a bounce before a hit there. SPX 60min chart: (more…)
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:
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…)
SPX made yet another marginal new high yesterday making a total of five new all time highs over the last two weeks, all in the 2070s within a total range of less than six points. That’s a lot of effort from the bulls to fail to get get over what has so far been extremely stiff resistance. In the event that the bulls are unable to push through this resistance , or spike through but can’t sustain trade over the 2070s, there is now a very nicely formed pair of nested double tops lighting a path down to a retest of broken resistance at the 2019 high. SPX 5min chart:
SPX made a marginal new all time high yesterday and the odds against the bulls on the historical 5 DMA run stats improved in their favor, as only three of the previous five examples returned to make a new high. Two of those still failed at that marginal new high however, and if we should see failure again here then there is now a very nice looking double top setup that would target the 2023 area on a sustained break below Monday’s low at 2049. SPX 60min chart:
I wasn’t looking for the strong rally yesterday but I had mentioned in my posts on both Monday and Tuesday the possibility that the current high might be retested to make the second high of a double top, and that is what we should be looking at here. A lot of people were assuming that the retrace was complete yesterday evening but it’s too early to say that, and the historical odds are still stacked against that outcome here.
The reason for that is in part the SPX daily sell signal that triggered on Monday, which has an impressive track record, but is even more so on the historical performance after the break of the five 20+ day runs above the 5 DMA since 1961, and after a close look this morning the stats for these are below: (more…)
SPX closed above the 5 day MA yesterday and that took the number of consecutive closes above the 5 DMA to 27, which is a record as far back as my decent daily data goes back to the end of 1961. I was saying yesterday that this might be an all time record and Zero Hedge posted an article after the close yesterday confirming that, and adding that it equals a 27 day run in 1928. If we see another close above today then that would beat even that into a new SPX lifetime record.
There have been five previous runs of 20 or more closes above the 5 DMA going back to the end of 1961, and I’ve noted the stats on all of those for what happened after the end of the run in the short term, and also what happened over the next year. Those stats are on the chart but in summary the end led into a retracement of between 2% and 7% with the median retrace at 3.5%, and all of the previous five were up over the following twelve months, though as Tyler Durden noted, that wasn’t the case in the case of the run in 1928. Even in that case however the market doubled again before it halved, so regardless history is telling us to expect more upside after some retracement. SPX daily 5 DMA chart: (more…)
As the entire world knows by now, China joined the rest of the world’s central banks in more “easing”, which sent markets into a spastic move higher. As you can see by this view of the NQ, this massively bullish news has not, as of yet, represented any kind of sea-change in the markets. Before the day was even out (again, in some, not all markets), the entire move up was reversed.