If there’s one thing that SPX has been really good at over the last year or so, it is pausing at highs, and one of the best ways to really kill time at highs is to form triangles. The obvious read on SPX here is that a triangle formed from the all time high nine weeks ago, and that broke up at the start of last week into another smaller triangle that is forming from last week’s high.

The obvious read on this current smaller triangle is that it is bullish into the ATH retest that we have come close to a couple of times but not seen as yet. Given though that this triangle has formed on the break of the larger triangle, there is a decent bear scenario here where SPX breaks down from this triangle in a backtest into the larger triangle, before a triangle thrust up that at least delivers that ATH retest. If the bear scenario is going to play out then the first signs would be breaks of rising channel support and the 50 hour MA, currently at 2386 and 2384 respectively, and the target should be at least a backtest of broken triangle resistance, currently in the 2360 area. (more…)