NFP Disappoints

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Bulls had a weak start but recovered strongly yesterday. That set up a rising channel that on the bigger picture is likely to be a bear flag. I was carefully considering upside resistance levels within that flag but the NFP number was bad, and it seems likely that the bear flags of various kinds on the various equity indices are likely to break down this morning. Scan 3x 60min SPX INDU TRAN charts:

151002 Scan 3x 15min SPX INDU TRAN

Scan 3x 60min NDX RUT NYA charts:

151002 Scan 3x 15min NDX RUT NYA

One thing I missed in my very intense week was that SPX broke above the 5DMA on Wednesday, and with the close above it again yesterday, that makes today day three on my 5DMA three day rule. The SPX 5DMA is at 1908 today and a close below it today gives a very high probability that the 1871 low would be tested and most likely broken on the that test. SPX 5DMA chart:

151002 Daily 5DMA Day Three

Leaning bearish here. The 1871 low never looked convincing and I’m expecting it to be broken soon. On a strong break below the full flag target would be in the 1780 area, and it’s worth noting that I gave that as a possible target a few days ago because SPX rising channel support was there is still close. That is a credible target that could be made if bears can avoid losing their car keys again for a few days.