Uncertain Break Upwards

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SPX and RUT both broke up yesterday, and on RUT that was a very definite break up which was nicely followed through. That wasn’t the case on SPX where the action after the break was uncertain, and that has continued overnight on ES. If we are to see a retest of the highs then I would not expect to see 48 retested before the highs were retested, and I’d expect to see ES hold above 1753 today. Initial support at the start of the trading day should be in the 1756-8 range, with support at the low yesterday at 1756, the 200 hour MA currently at 1757, and the weekly pivot at 1757.4. The 50 hour MA is currently at 1758.50 and ES has been trading below that for the last few hours, which is bearish while it lasts. ES 60min chart:

131105 ES 60min Pivots BBs MAs

If we do see the highs retested this week then I’d expect to see the weekly upper bollinger band tested as well. That’s currently at 1777 and I have a maximum closing range this week in the 1780-5 area. SPX weekly chart:

131105 SPX Weekly Patterns BBs MAs

When the current high was made I mentioned that I was concerned that there was no negative divergence on the daily RSI 5, and if the highs are retested this week I would expect to see that negative divergence established. SPX daily chart:

131105 SPX Daily Patterns BBs MAs

Looking at the RUT chart it’s very possible that RUT will form an IHS at an 1108/9 neckline. If so I’d be looking for the right shoulder to form today. RUT 60min chart:

131105 RUT 60min Poss IHS Forming

GLD broke up from the declining channel last week and has been chopping around since. A rising channel may well form here and if so I have sketched in where the currently unconfirmed channel support trendline would be. GLD 60min chart:

131105 GLD 60min Trendlines

What I would like to see today is a morning low established at 1753 ES or above, followed by a move up from that low that would break above resistance at 1764 ES. If we see a break below 1750 ES then a retest of the highs this week would look much less likely.

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