Yesterday was one of the lowest volume days of the year, and today was not an exciting day. This isn’t unusual just before a holiday weekend, though it’s rare to see much slowdown before Thursday. Yesterday I mentioned two levels that were unfinished business that might well need to be completed on NQ and TF. The unfinished business on TF was the test of the IHS target and monthly pivot at 1386, and that was hit this morning. The unfinished business on NQ was at the full retest of the all time high at 2427, and that was hit at the high this afternoon. I now have no open pattern targets above, apart from a weak possible alternate IHS target on NQ at 2746.
The obvious next move here is a reversal back down. The setup is all there and if this was a bullish setup I’d be taking out a second mortgage on the farm to add to my longs. As a bearish setup I like it a lot, but is obviously reliant on the bears showing us something to show they are still with us in more than spirit.
The important trend support levels on SPX below are at the daily middle band at 2390, the 5dma and 2389, and the 50 hour MA at 2387. Bears need to break that band of support and convert it to resistance to demonstrate that they are still in the game here. If they can manage a sustained break below then the next obvious targets would be possible double top support at 2322 and then rising wedge support in the 2280 area.
SPX daily chart:
An RSI 5 sell signal has fixed on the hourly chart. SPX 60min chart:
The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.
ES still likely topping out. The RSI triangle broke up and made target at 70 (on RSI), A possible 60min sell signal is still brewing and first strong support at the weekly pivot at 2390.5 is a strong match with the 2387-90 key support band on SPX. ES Jun 60min chart:
NQ has made the IHS target and has no further unfinished business above. A 60min sell signal fixed yesterday and I’m looking for reversal back down. NQ Jun 60min chart:
TF made the unfinished business at the IHS target and monthly pivot test at 1386.7 and rejected there to break down through wedge support. This high should be in, barring a possible retest of today’s high as part of a topping process. TF Jun 60min chart:
I’m concerned about the low volume and approaching holiday for this setup, particularly as bears have a history of performance issues and failing to get it down, so to speak, when the moment of truth arrives. We’ll see how they manage here. It is a nice setup, and the reservations I had yesterday about obvious unfinished business above have been sorted out at the NQ and TF highs today
Stan and I are doing a free public webinar at theartofchart.net an hour after the close tomorrow on Trader Psychology in the second of our Managing Risk webinars, and if you’d like to attend then you can register for that on our May Free Webinars page. The video for last week’s Big Five webinar is also posted there. I would also note that this week’s edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we’re thinking of making the strategy there a bit less conservative. That’s a free weekly service and if you trade futures I’d suggest adding it to your reading list.