Being The Second Mouse

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I mentioned in my morning video on Tuesday that Tuesday and Wednesday were both cycle trend days. That means 70% odds that the day is dominated by one side or the other, but often not an actual trend day. Both days were dominated by buyers and ES peaked at 2299.50 overnight.

Are we still going to get a backtest of the triangle? Likely not, as the thrust up yesterday was strong enough to be part of the main triangle thrust. However we are looking for a three part move here, and the first wave looks completed, with full 60min sell signals fixing on all of ES, NQ and TF overnight.

What are we looking for at this high on SPX? Rising wedge resistance is currently in the 2305 area, and that would often overthrow at a high. We might see an overthrow as high as 2325 before this high is made, though equally we could retrace here, retest 2300 and fail there. We’ll see. Either way SPX is in the high window, but that runs for another nine days including today. Historically there are no rewards for early arrivals to the short side on SPX, which always seems to take longer and run higher than expected at highs. The early bird may get the worm, but it’s the second mouse that takes the cheese. SPX daily chart:

170126 SPX Daily

On ES the rising wedge I posted yesterday has broken down on a 60min sell signal. I’m watching for a possible reversal pattern to form to deliver a (likely) retracement target, but the obvious fibonacci targets are in the 38.2% (~2282), or 50%, (~2276) or 61.8% (~2270) target areas. ES Mar 60min chart:

170126 AM ES Mar 60min

Nothing as clear on NQ, but having updated my Big Five charts last night I don’t think the high is in yet. First rising support in the 5133 area. NQ Mar 60min chart:

170126 AM NQ Mar 60min

As with NQ this retracement is likely to mainly be to establish a support trendline. I have an eye on the 1366 level as a possible target for this retracement. TF Mar 60min chart:

170126 AM TF Mar 60min

There are no more cycle trend days this week and I’m expecting today and tomorrow to be less directional than the last two days. A decent retrace low today will likely be a long opportunity into a significant high to be made in the next few days.

Stan and I are doing a free educational webinar at theartofchart.net an hour after the close tonight on the subject of ‘Technical Patterns you can profit from’. If you’d like to attend you can register for that on this page here. Space is limited to 500 places and we already have over 420 attendees registered, so if you want to attend you should register ASAP to ensure that you can.