SPX closed below the main SPX support/resistance trendline at the end of last week. This trendline has broken twice since 2009, and both times SPX followed through hard. In 2011 SPX broke very hard through it and never broke back over it until until 2020. In 2020 SPX broke over it, then closed the next week back below, and then didn’t close back below it again until last week. This is too limited a sample to extrapolate much from but there is precedent for failing to confirm the break the following week and then following through the break and so the likely weekly close back above today has precedent from 2020 and is not an obviously bullish development.
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SPX Breaks Main Support Trendline
I was disappointed to see SPX close well below the main support and resistance trendline on Friday (Editor’s Note: Why? Why on Earth?) . This has only happened twice since the start of 2009, and on both occasions SPX followed through the break with force. Two instances is somewhat less than a statistically significant sample, but further downside is now undoubtedly open, even if the bull flag setups on many indices, sector ETFs and stocks are still intact.
SPX weekly chart:
Retest Interruptus
After the low last week very decent quality IHS patterns formed on SPX, NDX, IWM and Dow and broke up this week. They all failed, setting up targets at the retest of last week’s lows, which would generally all be reached, so the fact that only Dow has delivered that retest so far tells us that there may well be unfinished business below.
The question here is whether the impressive collection of bull flags that have formed from the all time highs on many indices and stocks are going to deliver, and equities are still in the inflection point where that decision is being made.
(more…)Decent Looking Candidate Low
SPX rallied hard on Friday and so closed back well above my retracement target support trendline, so that has held on a weekly basis and may still hold as the retracement low here. So how is this low looking as a possible retracement low?
The first thing to say that my possible very bullish scenario that I was thinking might well be set up on this retracement is, if not dead, at best sufficiently badly damaged that the pattern target could not be relied upon even if the current all time high was next to be broken and converted. The pattern setup requires a fairly precise retest of the trendline and this didn’t meet that standard. Given the economic background that scenario was perhaps too much to look for in any case.
(more…)Friday The Thirteenth
In my posts over recent weeks I have been following on from my post of 6th August 2021 when I was looking at the possibility that there would be a retracement this year to backtest a major broken resistance trendline on SPX, and the possible very bullish setup that a good retest would partially confirm.
The trendline is the main resistance trendline on SPX on SPX from the low in 2009, shown on the chart below, and it was and is a really good trendline. The start was at the 2009 low, with touches at the lows in 2010, and highs in 2011, 2012, 2013, 2014, 2017, 2018 and 2020. It was so strong that I was expecting it to hold indefinitely until it broke in the wild move up after the 2020 low. This is the trendline I was looking to be back-tested, and SPX delivered a visual hit of that trendline at the low early this week, and has broken below it slightly on Wednesday and Thursday, as you can see on the weekly chart below.
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