The SPX daily middle band and the 50 DMA at 1864 were tested yesterday and bears managed to get as far as 1859 before a very strong rally began that lasted the rest of the day. Nice recovery from the bulls, and SPX is still stuck firmly in the middle of the current range between 1850 and 1897. SPX daily chart:
The bull side did score some real points yesterday though, and while SPX has now made a lower high and low from the 1891 high, the falling channel from there broke up slightly at the close. That opens up a possible follow-through today, and SPX can try to beat the last lower high at 1885.51 and break the short term downtrend. SPX 1min:
Overall the bear case is looking a lot better here in my view, but the RUT chart has an interesting setup that could boost the bull case considerably as the low yesterday was a possible second low of a double-bottom that would target new highs if the pattern completes forming and breaks up. The first step on that road would be to break the falling channel on RUT, and if bulls are still in with a decent shot of strong new highs, that has to be their main target short term. RUT 60min chart:
NDX is still looking weak, and again the setup strongly favors the bear side here, but if NDX can break back over falling megaphone resistance then this could still resolve bullishly. NDX 60min chart:
Oil has been bouncing the last couple of days, and the obvious target is a retest of broken rising megaphone support. That would be a nice looking short entry with a target at double-top support, which is also the megaphone target. USO 60min chart:
Support and resistance are very clear here. Bulls need to break below 1850 SPX to trigger the first in the sequence of double-tops that I was looking at yesterday morning. Bulls need to break above the current all time high at 1897 SPX with confidence to open up a move into the 1900s. If the RUT falling channel breaks up then that should be an early warning that the bull case is going to win out here. The stats for today are neutral and I have no strong lean coming into the day.
