Chopping Around Near Support

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SPX made a low at 2045 yesterday morning and has been chopping around since. There is much talk that the low is in but I doubt it. My 5 DMA stat is expecting a break below the 2039.69 low and we haven’t seen that yet, and I still have possible bull flag support in the 2030-5 area. If that isn’t the reversal area I’d be looking down rather than up for the next targets. SPX daily chart:

150327 SPX Daily Broken Rising Wedge Options

The move up from the low yesterday was a rising wedge which then broke down in the afternoon. I posted the chart below on twitter then with the comment that in this context that rising wedge would generally be a larger degree bear flag, with the target either a retest of the low / marginal new low, or an extension down to the 2000 area if the first target failed to hold. That remains the case. SPX 5min chart:

150326-I SPX 5min Rising Wedge cum Flag

As it is Friday today the close is important on the weekly bollinger bands. The middle band is at 2061 and ideally today I’d like to see a test of the 2030-5 area and then a close back near or over 2061. That could be a tall order of course so we’ll see how that goes. SPX weekly chart:

150327 SPX Weekly Rising Channel

I’m leaning bearish until the 2039.69 low is broken. After that I’ll be looking for a possible low, ideally in the 2030-5 area. There is a significant chance that SPX would run away to lower targets, though I think that’s still unlikely.

I’ll be doing a weekend post on bonds explaining why I think a very big move down has started that should at least reverse the entire move up since the start of 2014.