Yesterday saw a sharp decline into an early morning low that was given back in a grind up for the rest of the day. The low was an almost perfect test of the daily middle band, and that may well be it for the retracement I was expecting. If not though then of course I was saying yesterday morning that more might be needed to be done on forming short term topping patterns, and I’d note that five of my six optic run charts now have nice looking possible double-top patterns, and the sixth is right at resistance and was turning down there at the close last night. SPX has now formed a very nice looking falling channel from the last two highs and if that survives into the open, then overall this is a potentially bearish setup for today. SPX 60min chart:
Greetings from Whole Foods Market in Palo Alto. There are times when I simply have to get away from my home office, since even I have limits as to how many hours I want to stay in the same place. I come to Whole Foods often enough to notice that a fair number of insane people come here. I divide them into (a) insane people without money and (b) insane people with money.
The insane ones without money are the more obvious ones. They are the ones yammering to themselves, or dressed in really peculiar outfits, or otherwise looking semi-homeless. The ones with money require a more discerning eye (or, in my case, a good memory). FLASH update: at this very moment, one of group (b) sat next to me and is having a business meeting on speakerphone. Astonishing. (It’s a very typical conversation: “I’m just trying to keep my day job while trying to raise money for my pet project.”)
Another very strong day from the bulls yesterday, and both of the breaks above the daily mid band and the 5 DMA were strongly confirmed on SPX. That doesn’t kill off any bear case altogether here, but it means that rather than trying to prevent a break up, bears would now have to break back down. My lean is bullish and I’m not really expecting bears to break back down, but I am expecting to see some retracement today, and I’ve put the key levels on the chart below to show what bears would need to do. SPX 5min chart: