Last Orders (by Springheel Jack)

By -

Just a quick post today as I'm very busy. 

It was a nail-biting top but SPX topped and turned where it was expected
to on this chart and channel that I posted at the recent low at 1010.
The bear scenario  for the summer is still therefore my primary scenario
with an expected interim bottom at 870 within eight weeks. :

100719 SPX Daily RAABF

Looking at the recent top more closely on the SPX daily chart, as well
as this rather sloppy looking channel, there are a couple of other
things to note.

Firstly a sharply downsloping head and shoulders pattern is forming,
which is yet another pattern indicating into the high 800s in the event
that the neckline is broken and the pattern confirms. The main thing to look for on H&S patterns with sloping necklines is that the shoulders should nonetheless be of roughly equal height. That is definitely the case on this pattern, so I am adding it to the even larger main bearish patterns on SPX at the moment that are indicating towards the same target.

Secondly both RSI and MACD have formed clear support and resistance
trendlines that signalled the recent top, and are worth keeping an eye
as they may well signal the highs and lows over the next few weeks.

100719 SPX Daily Sloping HS Pattern

In the short term, Friday was a trend down day and we would normally
expect to see two to five days of retracement after a trend day. I'm
expecting two, and my target for the retracement is the strong range
resistance level at 1084.5 ES. It may be that we only reach the
resistance level at 1074 though.

On the ES 10min chart a short term rising support trendline has been
established since Friday's low, and if it holds then the range support
level at 1064 should hold. If it breaks I'm expecting to see strong
support at 1054.5:


If the bear scenario for the summer plays out as I expect, then the next
two days will most likely be the last really good opportunity to short
it. I'm expecting to see a retracement to 1085 SPX and if so, then a
short from there has 215 handles of potential downside, while a rise of
only twenty points from there to above the recent high would signal that
the bear scenario was in trouble, and would therefore be a good place
to put stops.

That's a risk reward ratio of more than 1 to 10, and I'll be taking
full advantage of that.