We've reached the stage where I'm starting to look for a decent classical low on SPX. What we need for that is a bounce and then a lower low on SPX with positive divergence on daily RSI, or on NYMO as Cobra was illustrating with this excellent chart last night. No sign of that so far on the SPX chart, and I'm still leaning towards a target low in the 1220 – 1230 area.
There's some concern that this may not be a correction of course, but I have two lines in the sand for that. The first is a close below 1209 SPX, as that would be more than a 10% move from the high, and I've read that there haven't been two corrections of over 10% on SPX in a single cyclical bull market since 1945, the first move down over 10% having been seen last summer of course. The second would be a break with conviction below 1175 SPX, as that would break the main bull market rising channel that I've marked on the SPX daily chart. I'm not expecting to see either here though and I'm seeing this as just a correction unless demonstrated otherwise:
Vix broke up from my trendlines yesterday so I'll have to retire my 30min chart for the time being. I'm actively on the watch for a Vix buy signal when we see Vix pull back within the daily BBs:
Copper is still looking divergently bullish and is testing the short term resistance trendline in the 428 area. If it breaks up I'll be expecting a move to a potential IHS neckline at 438:
30yr Treasury yields moved down sharply in line with my expectations yesterday. I'm seeing 4.25 as the key support trendline for this and a break below that would indicate that we are seeing more than a correction:
I was going to post the long term USDJPY chart today arguing the technical case for a long (short Yen) at the 78.75 level. Overnight though there were wild moves in Yen that pushed USDJPY as low as 76.42, so this chart is now just a good example of a long term support trendline breaking:
Another long term support trendline is being retested today, and that is the support trendline for USD from 2008, after what has been the most listless flight to safety bounce in recent years. There's a case for a long on USD here but I won't be taking it:
I'm leaning towards more upside today as the timing feels right and ES and NQ made decent lows yesterday with positive RSI divergence on the hourly charts. I think that the obvious targets are 2254 on NQ and 1283 on ES. I'm not feeling well today so I'll miss most of the session I think. Everyone have a good day. 🙂
