The SPX rising wedge broke down slightly yesterday and then followed through hard this morning. I have a minimum target at the 38.2% fib retracement in the 2280 area. However I would normally expect to see a topping pattern at a high like this and while there is some potential for an H&S to form, I’d note that about 70% of SPX significant highs are made with double tops, so we may well still see an ATH retest before the main decline begins. If we are to just see a move to 2280, and that is going to be set up with a double top, then the obvious place to see the rally to the second high start would be in the 2340-50 area, and I have drawn in a couple of possible bull flag support trendline options for that. The first one has been tested at the current low today. The hourly RSI 14 sell signal has made target but no positive divergence yet. SPX 60min chart:
On the daily chart the middle band has broken down hard and the lower band has been tested at the lows. If we see a move to the 3sd lower band in the 2340 area that would be an extreme level of short term oversold that would normally deliver at least a modest rally. In the absence of a large rally today the RSI 5 sell signal should make target at the close. SPX daily chart:
I’m seeing some H&S potential on ES here if we see a rally into a backtest of broken triangle support in the 2362 area (ideally). ES Jun 60min chart:
NQ made a new ATH this morning and then broke down from a small double top with a target in the 5340 area that has not yet been made. NQ Jun 60min chart:
Yesterday morning’s double-top setup on TF broke down hard this morning and has made target. TF has broken the last low at 1350 and the obvious big level not far below is the possible H&S neckline in the 1340/1 area. TF Jun 60min chart:
I’m watching for divergence here and looking for possible high retests starting soon on SPX/ES & NDX/NQ. Less likely on RUT/TF. We may not see those retests but if seen those should set up some great entries for the main decline to come. Today is a cycle trend day and it may be that there will be no significant rally until the last hour or the close.
