I've been warning all week that the nice bullish setup into the 1240 SPX area might fail as the main trend is still down, and it looks as though it has broken down with conviction overnight. The technical position might be recovered with a very fast and strong recovery this morning, but failing that the advantage is back with the bears. NQ cracked first yesterday and broke rising wedge support:
TF held the support zone yesterday but fell through it overnight. After a bounce at rising support which confirmed the trendline and has given us a second rising wedge on an equity index, the wedge then broke downwards. I'm wondering about a retest of broken supporting the 700 area in the morning session:
ES broke up yesterday morning but the breakout failed and fell back. 1180 support held during the day but was then lost in the overnight session. Rising support is in the 1156 area and a bounce there would deliver a third rising wedge. We might well see a bounce there, possibly to retest broken support in the 1180 area:
Bonds gave an early warning of trouble yesterday, with TLT having risen strongly for both of the last two days. TLT is within striking distance of new highs, which I'm expecting soon:
I was speculating yesterday morning that the break up from the EURUSD triangle might be a false break up before a real break down towards support in the 1.385 area. I'm still wondering about that today and if we are starting another move down on equities then I think that is more than likely:
The advantage is firmly with the bears today but we might yet see a strong bounce to test broken support in the 1178-80 area before dripping much further. The Gap Guy says that the odds for a gap fill today are good and while I think that's unlikely, we might well see a strong attempt to fill the gap. Kudos to Pug for calling the likely high in the 1200 area all week and he is targeting a retest of 1101 on his primary count.
