An all equities edition today as I’m suffering from a hard to shift cold and have made a slow start this morning. The H&S I was looking at yesterday formed and then broke down. ES didn’t make the H&S target yesterday but after a bounce that failed overnight at the 50 hour MA it made the target in the last hour. ES has formed a rough falling channel that looks bullish as long as it doesn’t break downwards, and the next move due within the channel is up into the low 1760s. If and when ES can break above the falling channel and recover over the 50 hour MA I’ll be looking for new highs shortly thereafter. ES 60min chart:
I was talking about the possibility yesterday morning that RUT would retest the break above the falling wedge and it did that yesterday. The next obvious move is up and on a break over 1102.96 I’ll be looking for a test of the highs. RUT 60min chart:
The confluence of targets in the 1790-5 area that I was looking at yesterday is still valid, but would need SPX to turn back up again today really to put the bollinger bands up on the daily and weekly charts. That looks easy on the weekly but might be tough on the daily chart where the bollinger bands are now pinching together. The daily upper BB closed yesterday 1783, down 6 points on the day. This BB pinch should signal a decent trending move starting soon and also makes it easy for SPX to test the lower bollinger band, currently at 1730, in the event we see a break down here rather than a break up. SPX daily chart:
How likely is a break down here? Less likely than a break up in my view, but it is definitely possible that the low last Thursday was the valley low on a double-top targeting the 1715-20 area. If we see a break below 1746.20 SPX then that will be the target, but 65% of possible double-tops never make it back to the valley low, and the chances are that this one won’t either. Something to bear in mind however. SPX 60min chart:
Bulls want to hold the 1753 ES area today, and then break back over 1765. Bears want to break below 1753 and target the double-top valley low and trigger level in the 1742 ES area to open up more downside.