The rally from Monday’s low has proved to have some legs, and came close to retesting the H&S neckline yesterday. At the high yesterday a perfect bear flag rising channel was established and my lean here is that the H&S neckline at 1872 is likely to be respected on any retest, and that the obvious next significant move should be down. SPX 60min chart:
As ever it’s possible this might go the other way of course and there is a possible double bottom alternative on the ES chart that would target the 1892 ES (1897 SPX) area on a clear break back over the H&S neckline at 1872 SPX. At the moment I’m seeing that as a possibility rather than a probability though. ES Mar 60min chart:
Today is the last of the three cycle trend days this week. Yesterday was an inside day in the end and my lean today is to see continuation downwards. If this goes the other way instead the first sign will be a break back over the H&S neckline at 1872. If we are to see continuation down today then I’ll be looking for an AM high that fails.
The H&S on SPX broke down yesterday with alternate targets at a retest of 1812 and 1797. I’m not seeing any reason to think that we won’t at least see a retest of 1812 and given that today is also a cycle trend day, it’s very possible that we see that target made today. SPX 60min chart:
The main pattern I’m watching this morning is of course the H&S that formed on SPX last week. I called it as a possibility on Wednesday morning, and the H&S completed forming at the low on Friday. With SPX currently over 20 handles down from the close on Friday this could be a breakaway gap through support, in which case the key resistance levels to watch this morning are the retest of the H&S neckline at 1872, and the opening gap from Friday’s close at 1880.05 should not be filled. SPX 15min chart:
SPX just kicked around without any definite direction yesterday and so far today the same again, though we may now be starting to resolve down. This sideways action is neither bullish nor bearish, and is a decent fit with both the H&S and larger IHS scenario marked on the 60min chart below.
What is potentially interesting here is key support on the 50 hour MA, with that currently at 1909 and SPX at 1890 at the time of writing. If bears can convert that into resistance, having been support all yesterday, then we may resolve in the obvious direction, which is down. SPX 60min chart:
Panera Bread Company (PNRA) jumped today more then 2% and reached horizontal resistance area at $200 that has contained prices since August of last year. The stock is putting pressure on that resistance zone, a break of which could lead to 204-206 area on the short term.
Sinisa Persic, CMT (www.traderhr.com)
My speculation yesterday morning that SPX might well retest the ES weekly pivot at 1909 from the ES low for the day at 1865 proved to be right, and the possible H&S that I was speculating about in the morning has now made an ideal right shoulder high. You can see the setup on the 15min chart below. If this pattern completes and breaks down, then we should see the retest of the 1812 low in the next couple of weeks. SPX 15min chart:
Some days things happen so fast after the open that by the time I get my post up much of the post is already out of date. This is one of those days. On the charts below I outlined a possible bull scenario and assigned it a possibly overgenerous 25% probability weighting. That is a lot lower now as the overnight rally failed hard at the ES weekly pivot at 1909, which was the key support level I gave on ES yesterday morning.
On the plus side I shorted the obvious resistance at 1909 ES and my runner from that trade is currently +33 or so, so I’ll keep my grumbling to a minimum.
On the bear scenario the rising wedge rally from the 1812 low broke down yesterday after an ideal 50% fib retracement of the falling megaphone from 2081, and as that rising wedge was a bear flag on the bigger picture. the alternate targets for the bear flag are either a retest of the 1812 January low, or the full flag target in the 1690 area. The high this morning was a perfect retest and hard fail at broken rising wedge / flag support. SPX 60min chart: