The bears took our preferred triangle breaking up to new highs scenario yesterday and beat it to death with sledgehammers. 2134 is now likely to remain the 2015 high and SPX has further downside targets that I’d expect to see made in coming days.
The triangle has broken down with a target in the 2015 area, close to the 38.2% fib retrace of the rising wedge from the October low, but the main target in my view is the larger double top target at 1954 (slightly above the 61.8% retrace) that fixed on yesterday’s extended and dramatic break of double-top support at 2044. The SPX daily chart:
On the short term chart the pattern from Wednesday’s intraday high is either a falling wedge or channel. Preferred option is wedge but if we see early weakness today (ES trading 18 handles under the RTH close as I write), then the low should confirm which pattern this is. When it breaks up, which I’m expecting today, but in this angry tape it may not, then I’d be looking for a short term reversal pattern and a strong rally from there, into at least the daily lower band. SPX 5min chart:
SPX is on a daily lower band ride here, and I’d expect to see at least a touch of the daily lower band today. That closed yesterday at 2054 and may close as low as 2040 today. I’ll be doing a bigger picture post looking at the weekly and monthly charts on theartofchart.net later, and will post the link on twitter. For now though I’d note that the weekly lower band is at 2054, and if a rally in the afternoon comes close to that it could be a magnet for the close.
