SPX filled the gap from Friday’s close yesterday afternoon, but there is still more to be done to confirm the low. The next test up on SPX is to break the 50 hour MA, currently at 2354 and SPX is testing that at the moment. If broken the next levels are an intraday higher high over the last rally high at 2358.92 and a daily close over the daily middle band, currently at 2367. The 2359 high is a possible IHS neckline so we could see a right shoulder retracement there. If so the ideal right shoulder low would be in the 2336 area, with the 2333-6 area being decent established support. SPX 60min chart:
The symbol below (GRA) has an astonishing topping pattern for the ages. I believe it’s going to fall. A lot. For a long time.
Here’s some perspective:
A big gap down this morning from Friday’s close at 2343.98, not quite filled at the time of writing with the high so far today at 2343.79. Unless SPX fails hard here this is a strong candidate low for at least a few days, and the resistance levels I’m watching are the gap fill, then declining resistance in the 2348 area, then the last rally high at 2358.92. On a break over that I’d expect a test of falling megaphone resistance currently in the 2382 area, and on a break over that the obvious target would be a retest of the all time high at 2400.98, very possibly to make the second high of a double top. SPX 60min chart:
Now that I’m home, and on the other side of only four hours’ sleep, I’m ready to crawl back into bed and enjoy an all day siesta. That really isn’t’ an option for me, however, so I’ll just toss out a quick post, do a quick dog walk, and jump into this interesting trading day.
What I will say is that my multiple mentions a week ago about how “trendlines matter” seems to have shown itself to be true with flying colors, as we’ve witnessed one of the most meaningful drops we’ve seen in a year’s time.
I’ve been suffering with a bad back all week, and this has been disrupting my sleep so I’m hoping to catch up on sleep at the weekend, which I’m very glad is starting in a few hours. In the meantime ES is just chopping around waiting for nuggets of news about the progress of the Healthcare bill, which at the time of writing seems unlikely to pass today.
Yesterday’s high has held so far on SPX and yesterday’s high was of course a very obvious level for the rally to fail, so that may well continue to hold. If so SPX should at minimum retest Wednesday’s low and I’ll be watching possible trendline support now in the 2330 area. On a break over yesterday’s high there are multiple resistance levels in the 2365-70 zone. SPX 60min chart:
The rally that the bulls failed to manage yesterday has been delivered today, with SPX sustaining some trade above the daily lower band, though albeit not by a lot. So far the rally has retraced 50% of Tuesday’s decline while forming a very nice rising channel. So far this is a classic bear flag setup that on a break of channel support should at minimum deliver a retest of yesterday’s low. SPX 5min chart:
That was a very powerful break down yesterday, ending what I understand was the longest period on SPX ever without a 1% daily decline. The rising wedge from November 2016 has broken down. The minimum target retracement should be the 38.2% fib retracement target in the 2280 area, and the next trendline support is rising wedge support from the February 2016 low, currently in the 2220 area and rising of course.
In the short term the open sell signals on the daily and hourly charts have made target, and I am looking for a topping pattern. I am also watching for the potential lower band ride that may be starting here, and in the case of a strong lower band ride we may see the daily lower band, currently at 2347, act as resistance, and the 3sd lower band, currently at 2335, act as support. If bulls can convert the lower band at 2347 to support then they have a shot at a strong rally here that could potentially retest the ATH to make a likely second high of a double top. SPX daily chart: