New Highs on SPX

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SPX made a new high yesterday at 1902.17 after breaking up from the range trading of the last few months. Kudos to my EW friends Pug and Alphahorn who both called this bullish resolution correctly, with Alphahorn saying last week that both of his bull and bear counts required new highs on SPX. That looked somewhat doubtful at the time but well, here we are.

On the SPX daily chart there is nothing to suggest that the new high yesterday might be a significant reversal level, and I’m looking for more upside after the current small retracement completes. SPX tested the upper bollinger band at the high yesterday and we could start a bollinger band ride upwards with SPX trading around the upper band. There is some significant resistance however at the weekly upper band, currently at 1907. SPX daily chart:

140514 SPX Daily Trendlines BBs MAs

On the SPX 60min chart we haven’t yet seen a hit of either of the rising wedge resistance trendlines that I’m watching here, so again there’s nothing there or on RSI to suggest that yesterday’s high was significant. SPX 60min chart:

140514 SPX 60min Rising Wedges

I posted the chart below on twitter last night and it shows a possible rising channel from the 1867 lows last week. If that’s right, and the channel doesn’t break down, then we would most likely see a low in the 1891-3 area this morning before the next move up begins. I’m not expecting anything lower, in part because Monday’s opening (breakaway) gap shouldn’t be filled until the current move up is over, and that doesn’t seem likely here. I will be watching that carefully if we see any move below 1890. SPX 1min chart:

140513-C SPX 1min Poss Rising Channel

I was talking about a possible retest of broken falling channel support on RUT yesterday morning and that would be a decent fit with the scenario on my SPX 1min chart above. RUT 60min chart:

140514 RUT 60min Breakout and Poss Retest

NDX has broken back over 3613, which is bullish. My concern with NDX is that we are still very close to the ideal high on the possible larger scale H&S that I posted back in mid-April. I have drawn in a possible short term rising wedge resistance trendline that would be a good fit with that H&S and I will be looking for a decent break above that in the next few days. NDX 60min chart:

140514 NDX 60min Trendlines and Patterns

I posted the USO chart a few days ago talking about a possible retest of broken rising megaphone support there. That retest was made yesterday, and if we see a reversal there then the obvious target will be larger scale possible double-top support in the 35 area. On CL that move would be equivalent to a move from 102 at the moment to a target in the 96.4 area. This is a decent looking risk/reward short that I entered last night so we shall see. USO 60min chart:

140514 USO 60min Broken Megaphone Retest

The lows yesterday have been taken out overnight so I’m leaning towards a buyable dip this morning followed by a very possible move to beat yesterday’s highs. If SPX trades under 1890 today then I’ll be watching to see whether the gap from Friday’s close at 1878.48 is filled. As long as it isn’t filled the bulls are in the saddle here. If it is filled then that would be a very significant sign of weakness.