Strong Resistance Broken

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There are plenty of reasons to expect a strong retracement soon. There are strong open daily sell signals fixed on SPX, NDX and RUT. The ‘Crazytown’ extreme overbought area relative to the 45 day pivot has been tested repeatedly over the last week, and with Crazytown starting at 2085 today, ES has spent the whole day so far in Crazytown. This is an extreme level and periods trading inside it do not tend to last long

That said the bears had the reassurance of being not far below major resistance trendlines until yesterday afternoon, and those major trendlines are now not far below, which means that they are no longer resistance, and may possibly now turn into support. I noted on my SPX daily chart a couple of weeks ago that a break above the SPX trendline that broke yesterday would have a target at a retest of the all time high at 2134.

Unless we see a break back over 2116 then I’m still looking for a strong retracement before that test. If we see a break back over 2116 SPX then I’d be looking for a test of the high first and then most likely that strong retracement very soon afterwards. The area above ‘Crazytown’ is ‘Bet Jerry’s House’ and it’s not called that because SPX has ever spent much time there in the past. That starts at 2115 SPX today and I would take a moment just to clarify that under no circumstances would I ever suggest going all in on any trade, as regardless of the setup that is never a sane option.

There is very likely going to be a strong retracement soon. The odds now favor that being a retracement into a continuation up to retest the all time high, unless that has already been retested before the retracement starts, in which case the retracement would be more likely to run away to the downside, with possible double top support then at 1810 SPX.

Short term, in the absence of a strong resistance level above. I’m going to be relying on the RSI divergences with which I’ve been calling the short term turns very well over the last couple of weeks even more to identify the possible swing high areas. SPX daily chart:

160419 SPX Daily Declining Resistance Broken

The ES 60min RSI 14 sell signal was important in identifying the two of the last three lows and the last two highs. There’s no current negative divergence here and there won’t be unless there is a full retest of the globex high at 2098.5 ES. I’m leaning towards seeing that retested with a marginal new high in the 2099/00 area today and at that stage bears could then fix a sell signal (with a retracement) to make a likely short term high. We’ll see whether they can manage that. ES Jun 60min chart:

160419 ES Jun 60min

Today is day five of an upper band ride on SPX and SPX is trading around the daily upper band, which is at 2100 today and is rising at about ten to fifteen handles per day. I’m looking for decent resistance today in the 2099/00 ES area, which is in the 2106/7 SPX area. On a strong break over that level we could see a short squeeze higher, and over 2116 SPX we would most likely see a retest of the 2134 high not long after. Trade safe.