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I was looking at something unusual in my premarket video at theartofchart.net this morning and that was a large number of H&S patterns both bearish and bullish. I don’t generally post my work here outside the equity indices but I’ll make an exception today as these are worth a look, and all really coming out of the reaction last week to the Fed indicating that tapering of COVID measures is starting soon in the US.
The first of course is the possible H&S forming on SPX that I was writing about yesterday. This is in the ideal right shoulder area and SPX is now in the inflection point seeing if this will now break down. If it doesn’t I’ll be looking for the high retest, but the historical stats and setup here are favoring a break down.
Friday was very weak, particularly for a big opex Friday, and SPX broke down through the daily middle band, currently 4215 area, the 50dma, currently 4183 area, and on ES even briefly broke down below the monthly pivot. We are seeing a rally this morning and I was giving the ideal rally high area on my premarket video at theartofchart.net in the 4230-5 SPX area. The odds look good for a reversal there into lower lows.
I had a couple of overhead targets that I was looking for this week, and the chances of making the ambitious one on SPX in the 4350 area finally withered and died with the hawkish FOMC comments yesterday.
The more important one was on NDX however, and that has completed as expected this week, with the final part of the topping setup there completed with the new all time high today.
There is now a very attractive nested double top setup there, and a possible daily RSI 5 sell signal is brewing.
On my last post I was looking at the setup for a backtest of the daily middle band, and SPX delivered that and has then rallied back almost to the all time high retest, which I’m expecting to happen ideally today or tomorrow, as the historical stats for Wednesday and Thursday this week lean significantly bearish.
June is not a bullish month historically on SPX, but it does have some bullish leaning days. Today, the second trading day of the month, is historically the strongest day of the month, with 76.2% green closes on SPX. Yesterday runs equal with Tuesday 15th June for second most bullish day of the month with 66.7% green closes.
Now these don’t always deliver by any means, as if they did the averages would all be 100%, but in a setup where there is obvious unfinished business above at the retest of the all time high on SPX, they generally would, so it is interesting that as the second trading day of June draws towards the close, there is little sign so far of the bulls showing up for work.
Just to review the overall position here. SPX is in a high quality rising wedge from the March 2020 low. Wedge support is currently in the 4110 area and wedge resistance currently in the 4310 area. The next obvious target is a retest of the all time high on SPX, and if SPX continues higher then the next trendline resistance within that rising wedge is that rising wedge resistance, now in the 4310 area, and rising of course.