I’ve had a gum infection this week and that has been affecting my sleep patterns and my powers of concentration. Hopefully it will mostly have passed by tomorrow, as it has definitely improved from yesterday to today.
I’m getting a post out before I go to bed tonight though because there is likely to be an important inflection point coming this week, possibly as soon as tomorrow, and everyone should be aware of that.
The short term picture on SPX / ES is that a triangle formed last week and broke up yesterday. I look at that more closely on the ES chart below but the way these generally work is that you see the initial break up (yesterday), then a backtest back into the triangle (today – possibly completed), and then a thrust up to a higher high, at which point we hit the inflection point that I’m looking at this week. When the triangle thrust ends the thrust is usually entirely retraced.
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:
I didn’t get to the post in RTH today, so I thought I’d do something different today and have a close look at NDX (Nasdaq 100). This is worth doing as there can be little doubt which index has been driving the bull bus in recent months, so I’ve been looking it carefully and am taking the opportunity to share what I’m seeing there tonight, with my normal mainly SPX-centric view back for tomorrow’s post.
The shorter term setup here is a rising channel from the April low within a larger rising channel from the November ’16 lows. The two channel resistance trendlines are intersecting this week in the 5830 area and that is the obvious target for NDX this week.
Editor’s Note: What you are about to read is dead wrong. So keep reading, because there’s a correction later…………
As I mentioned when SlopeCharts was introduced, one advantage of forcing me off ProphetCharts (which I have been using for a dozen years) was that I would get a fresh perspective on the markets. With all my symbols, trendlines, and other embellishments gone, I’d be able to perhaps shake off some old biases (or at least reduce them).
In that spirit, I offer this rather surprising post, in which I offer up the prospect of equity markets rising another 10% or so. Now perhaps my stating such a thing – – me, the permabear, saying something broadly bullish – – will be taken by some as a sign of the market top. I’ll happily exchange ridicule for top-ticking a market in exchange for a true downtrend! But regardless, here we go……….
I was saying yesterday morning that bulls wanted to hold 2368/9 on the backtest to go higher. The low of the day was 2369.19 and here we are. Short term though there is some formidable resistance at the daily 3sd (three standard deviations away from the middle band) upper band at 2394. Breaks over this level are rare, and an actual retest of the high will likely need to wait until tomorrow, when the 3sd upper band will be higher. SPX daily chart:
I’ve mentioned Abercrombie & Fitch repeatedly in years past as a great long-term short candidate, and it’s unfolded beautifully. Take a look at how, almost incredibly, the stock has come full circle to its financial crisis lows. Given the extraordinarily lofty state of the market in general, however, I think this stock isn’t done falling.