‘Gravy In the Gap’ is a day where the real action took place overnight and the day that followed is relatively muted. We could see an interesting day on equity indices today but it seems unlikely to be as interesting as the action overnight, unless we see a trend down day, that on the setup I’m seeing here would be surprising.
I said on Friday morning that it was possible that ES was evolving into a larger decline pattern, but that I was leaning against it. It did evolve into a larger pattern which was a falling channel and I posted that for subscribers at theartofchart.net on Saturday and we were looking for at least some more downside in the public Chart Chat yesterday. ES went a bit lower last night to 2179, two ticks above my lower double top target at 2178.5. The channel broke up later on and the next obvious target is a retest of 2214, with support at the weekly pivot at 2196.25. ES Dec 60min chart:
NQ has broken the falling channel and up from a double bottom with a target in the 4815 area. NQ Dec 60min chart:
TF reached the original H&S target I gave at 1307 and reversed there, breaking up from the falling channel and then a double bottom target at 1333 that it has now almost reached. TF Dec 60min chart:
I was expecting a retracement & called ES short into 2178.50 and TF into 1307 in my post on Thursday morning. I also said that I’d be looking for retracement lows near there and that those should be a buy, with the odds favoring the bulls for most of the rest of the month. That wasn’t easy to catch with the overnight action and the Italy referendum, but what happened was almost exactly what I was looking for there, and I can see no current reason to think that last night’s low will be retested in the near future, or to alter my bullish bias for the remainder of December. My advice is to be very wary of the short side here. Indices badly needed some minimal retracement and they got it. That’s probably the end of that story.
We did our monthly public Chart Chat at theartofchart.net yesterday and if you missed that you can see the recording here.
