SPX made my target area at 1965-70 and rejected hard there. A candidate significant high for a 10%+ correction is in place but we’re going to need to see some follow through here first to open up the obvious downside targets for that correction. On the SPX 60min chart the 50 hour MA was broken near the close yesterday and SPX closed below it. I’d like to see that established as resistance today and after that any significant break back above it would be a warning that this retracement might be over.
Assuming we see some follow through today the next serious support is at the daily middle bollinger band, currently at 1940, and if the bears are to have a shot at a decent retracement here then it will need to break. That would open up a test of double top support at 1926, and a sustained break below that would trigger a double-top target at 1884. If that target were to be made, that would break a cluster of important support levels between 1895-1910, with the daily lower band at 1910, the 50 DMA at 1903, and rising wedge support from 1737 currently in the 1895 area. If these levels are broken and the target at 1884 is reached then more significant downside targets would open up. SPX daily chart:
On the SPX 60min chart the trendline support levels are rising channel support from 1814, currently in the 1915 area, and rising wedge support from 1737, currently in the 1937 area. Bears need to hold the 50 hour MA above and aim to break down from this wedge. SPX 60min chart:
The 1884 double top target is supported by the weekly middle bollinger band, currently at 1882. Another thing worth noting here is the negative divergence on the weekly RSI 5. This needs to persist into the close on Friday, but if it does then historically I’d expect the weekly RSI 5 to decline to at least the 50 level. That would suggest at least a test of the 1900 area for this decline, and most likely more. SPX weekly chart:
TRAN is important today. A small double-top has broken down with a target in the 8050 area and if that makes target, the perfect rising channel from the April low will break. That would open up a test of larger double-top support at 7960 and a sustained break below that would open up a double-top target in the 7650 area. I’ll be posting this chart every day while this is in play. TRAN 60min chart:
Last chart for today is USO, which is suggesting more retracement on oil before (most likely) the next big push up. The setup may not deliver, but it suggests some caution at minimum, and I would note that I have main uptrend support for CL in the 101 area at the moment. USO 60min chart:
ES has taken out yesterday’s low overnight and assuming that we don’t see the bears crushed back into dust at the open, which I’m not expecting, but have become very used to seeing since the end of 2012, then I would expect to see the SPX daily middle band at 1940 tested today, and very possibly broken to start a further move down to test 1926.