I was saying on my post yesterday that the bear flag setup strongly favored at least a retest of the lows and we most certainly got that. On a sustained break below the lows yesterday the full bear flag target is under 1800, but Stan and I are not expecting this break to be sustained. The other cycle trend day this week is tomorrow, and our lean is to see a strong rally then. Today or possibly tomorrow morning we should see a new low below yesterday’s low. Our ideal number is in the 1879 SPX area, which Stan has been looking at in our theartofchart.net subscriber daily video updates for the last few days. SPX might go a bit lower than that but a decent rally should be close now.
In the short term the falling wedge has now evolved into a falling channel and SPX is on a 60min buy signal that I’m expecting to see play out, most likely after marginal new lows are made. SPX 60min chart:
On the RUT daily chart I’m working a possible overall falling megaphone from the highs, and that support trendline is just a little lower. RUT daily chart:
Is it possible equities break down hard directly from here? Yes, but the odds favor a rally before very likely new lows. I’ll be doing a post at theartofchart.net on the big topping patterns and targets on SPX, NDX and RUT either today or tomorrow.
Stan and I will be doing a free to all educational webinar on trading in bear markets on Thursday 21st January and I’ll be posting a link to that here tomorrow. I think the odds of seeing 1600 SPX tested this year are good so if you’re interested in strategies to trade that test I’d suggest attending.
Natural modesty aside, Stan and I have really been knocking it out of the park over the last few weeks and any of you who are struggling with these markets should consider subscribing to our (evening) daily video service. I also do bonus futures charts for ES, NQ, TF, DX, CL, GC and ZB every day for subscribers, and as I’m changing the password tomorrow, I’m publishing the access password for that today so any of you can check that page out. My bonus charts can be seen here, and the password is room101.
Looking for a more consolidation type day today. We may well see an AM high that fails though, and we are looking for that ideal 1879 SPX target to likely be tested today or tomorrow morning.
