SPX is still testing the open island top gap from the March rally high, and that has been solid resistance so far. My lean is that SPX will likely break up through that within a day or two, but there is now a clear alternate downside scenario shown on the SPX hourly chart below. Partial Premarket Video from theartofchart.net – Update on ES, NQ and TF:
Slope of Hope Blog Posts
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We are starting our second Academy Trader Boot Camp tonight in a webinar an hour after the close. The feedback from the last one was very positive and if you’d like to see that then scroll down to the bottom of our Testimonials page to find those. If you’d like to take this very reasonably priced and high quality four week course on TA, risk management and trading methods, there are still places available and you can sign up for that here until the RTH close today.
I was concerned on Thursday that SPX would fail to do the obvious second leg down on the likely overall bull flag forming here, and in all likelihood SPX has now broken up from that bull flag. Confirmation that SPX is going up directly comes on a fill of the open island top gap from the mid-March high at 2752.01.
I’m leaning against another leg down here but if the bears are going to have (yet) another try at that, then first support is at the ES weekly pivot 2718.25 (same area on SPX), then a break of rising support from the mid-May low, now in the 2712 ES area. (more…)
What is likely happening here is that SPX is doing an ABC retracement while forming a bull flag to go higher. Wave A was the first leg down and wave B was likely the rally into the lower high that we have seen so far. What we should see next is the C leg down below the wave A low, possibly extending as low as the daily middle band in the 2679 area, before the next leg up on SPX.
However last year that’s not the way this worked. The uptrend was so strong that every time the moment came for a second leg down, SPX broke up instead. That was the 2017 playbook and I’m not expecting to see that here, but it’s on my mind as a possibility.
A couple of announcements today. We did our monthly public Chart Chat on Sunday and if you missed that you can see the recording on our May Free Webinars page. We are doing a free webinar on Thursday after the close looking at our new directional Paragon Options service trading options on futures, and if you’d like to attend you can register for that on the same page. We finished our first Academy Trader Boot Camp course last Friday and the feedback was very positive. If you’d like to see some of that then scroll down to the bottom of our Testimonials page to find those. We’re planning to do these regularly and the next one starts next week so if you’d like a very reasonably priced and high quality four week course on TA, risk management and trading methods, you can register for that here.
On SPX the retracement we have been expecting is in progress and, since I recorded the premarket video below, is now testing the first main target area at the ES weekly pivot at 2704/5. There is decent support here, but I was noting on the video that there are some decent looking hourly RSI 14 sell signals that have fixed on SPX, NDX and RUT that are suggesting a break lower, and as of now, none of those sell signals are close to even the possible near miss (RSI) targets. Partial Premarket Video from theartofchart.net – Update on ES, NQ and TF: (more…)
That’s the law.
OK, maybe not (unless you take all your legal counsel from bumper stickers). But there does seem to be one market law these days, which is that on those rare occasions when selling is allowed to take place, the S&P 500 shall go NO LOWER than its 200-day exponential moving average. Keep this mind if this goddamned equity market every stops going up every single day.
It’s the happy-go-lucky 3 Amigos (in play since we began this goofy metaphor last fall), which would signal macro changes to come. When you are talking about the macro however, things move slowly and to date, only one of our riders has made it to his destination.
To review, they are Amigos 1-3, Chevy, Steve, and Martin.
- Stocks vs. Gold
- 10yr & 30yr Yields
- The 10yr-2yr Yield Curve
Below we’ll review a daily (short-term) and monthly (long-term) chart of each to check the status.
Amigo #1: Stocks vs. Gold
We noted Amigo #1’s eyes closed as stocks vs. gold took a big plunge in early February and again in March. This has actually set a lower highs, lower lows downtrend in 2018, and the swings have been very dynamic. Right now we are on an up swing and if you are a gold bug and this ratio rises above the March high please prepare to take caution, as the macro would be moving against you, at least relative to risk ‘on’ assets. But for now the lower highs and lower lows daily trend is intact. (more…)
TPO stands for Time Price Opportunity. By using a TPO profile chart, you are able to analyze the amount of trading activity, based on time, for each price level that the market traded at for any given time period. The Point of Control (POC) is the price where it spent the most time during that period and in that timeframe.
If you look at the following monthly chart of the VIX with the TPO profile study added to it along the right hand side, you’ll see that its POC (on a monthly basis) since 1986 is 20.53.
Whereas, the TPO POC on a daily timeframe from 1986 is 14.66, as shown on the daily chart below.
This tells me that the average “normal” range of the VIX during the past 33 years is between 14.66 and 20.53, regardless of its trading activity on either a monthly or daily timeframe.
I’d also go a bit further and say that any time it traded outside that range for any length of time, it was “unusual” and, therefore, unsustainable…something to consider when you’re taking longer position trades in equities.
As of Thursday’s close, the VIX was trading in “unusual” territory at 13.23…below the “normal” range, where it has spent most of its time since the November 2016 general election.
The last time it spent the majority of its time below the “normal” range was from 2005 to 2007 leading up to the 2008/09 financial crisis. (more…)