As a follow-up to my post from September 19th……..
The high window opens on SPX today and runs through to Monday 3rd October. During this period Stan and I are expecting to see a very significant high made that would then be followed by a decline that would be considerably larger than the modest retracement just completed. We are looking for a likely full retest of the all time high, with an eye on higher targets in the 2203, 2206/7 and 2210 areas.
On the daily chart SPX confirmed the break back over the daily middle band with another close above it yesterday. This opens a possible test of the daily upper band, currently at 2202. I’d generally expect to see a retest of the middle band from above today or Monday, and that is currently in the 2161 area. SPX daily chart:
The bulls met both of the targets that I gave them yesterday morning in that the 50 hour MA was converted to support and the close was above the 5dma, so the three day rule expired without a bearish break. Somehow though they managed to do that without inspiring any confidence that this uptrend has real legs. If it has at least some legs then I’d be looking for a test of the daily middle band next, currently at 2162. SPX daily chart:
All charts and video today done last night or this morning for subscribers at theartofchart.net.
SPX spent much of Friday under the 5dma, but rallied to close on it, so the three day rule was not triggered. Bears have a second and last chance today to close more than two handles below the 5dma, currently at 2138.10. If they can then the rule states that we see a retest of the current retracement low at 2119 and likely go lower. If they can’t then the retracement low may well already be in and SPX likely rallies into the high window that opens on Thursday 23rd September, ideally retesting the current all time high or going a bit higher into the 2210 target that Stan and I are looking at. SPX daily 5dma chart:
A very nice day for calls yesterday (buffs fingernails modestly) with RUT following through on the falling wedge I called in my AM post, the possible trend up day I called playing out, and then calling the likely (and actual) high of the day in the afternoon just after it was reached on twitter (shjackcharts). Hoping some of you guys caught some of that and the perfect SPX rising wedge from the low that I posted on twitter with the high call.
SPX broke back over the 5dma yesterday and that puts SPX back on the three day rule. On a break (2 handles +) back below there at the close today or Monday, that would require a retest of the current retracement low at 2119 and likely lower low. With the 5dma at 2137 at the close yesterday that wouldn’t be a big move though. SPX daily 5dma chart:
SPX has now completed for days of a daily lower band ride, and for the last three days SPX has been testing the 100dma at 2121/2, and that’s been looking pretty solid. The two obvious targets below are the minimum 3.9% target below from weekly upper band punch stats at 2108 and rising wedge support in the 2095 area.
Do those targets need to be hit on this move? Well if SPX returned to retest the ATH and only made a marginal new high then this might just be part of the topping process, something which I think is likely in any case, in which case the 2108 target could be hit, and likely exceeded on the next swing down. The current low would also be a (bigger picture) near miss of wedge support on SPX, something seen often before a rally, and then break down through it. It’s possible that this retracement low could be in, though so far I only have 60min buy signals fixed on ES, and brewing on RUT. That’s thin but maybe.
Apologies for the late post again today but I have been battling a host of technical issues with Stockcharts, our web hosts at theartofchart.net, and sundry other issues. All sorted out or mostly but all very time consuming.
Not much to say on ES and SPX here. Volatility is definitely back, and they have been consolidating before what should soon be a push down into the obvious target area. Looking at ES that move may well have now started. ES Sep 60min chart: