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We have a promising setup for a decent bounce on SPX but it has been failing at the first decent resistance so far. It may not get any higher, but I think it's too early to write it off altogether yet. We also have a possible triangle forming on SPX and if we don't see a break up today, then rising support from the low and triangle support is just over 1300:
I've posted quite a few charts in recent weeks and months that suggest that we could see a very bad 2012 indeed on equities, EEM, MSWORLD and so on, and I jokingly referred to my 'Apocalypse Charts' the other day when chatting to a trader friend. She asked me what I meant, and I replied that they were the various longer term charts suggesting that the next big move on equities might be to test the 2009 lows.
I added that I'm not necessarily expecting these to play out, but that they need to be considered as part of the technical mix here, and that if these patterns, mainly H&S patterns with some double-tops there as well, were to complete forming and then break their respective necklines, then that would be a major crash warning that could not be lightly disregarded. There are several such charts that I have posted here so far, and I'll post some more here today. It's fair to say that most major developed world stock indices are in the late stage of developing these patterns, excluding some US indices and those such as Greece, Italy, Spain, Japan etc where they are already either below or not far above those 2009 lows.
Whichever way you cut it the chart setup for equities here looks bearish. SPX still hasn't broken below 1340 support but the repeated failures at the broken H&S neckline last week look very ominous. There are in fact two bear patterns in play here. The first is the sloping H&S indicating to the 1290 area that I've been posting every day. the second is a double-top on the April and May highs, that indicates to 1292. Given that 1292 was also the October high and an important support level, on a conviction break below 1340 the obvious target has to be a test of 1292 SPX:
Well I said yesterday morning that the key to the day on SPX was the 1365.74 level, and the HOD was 1365.88. A marginally higher high but nothing worth writing home about. Declining resistance was pinocchioed but held on the SPX 15min chart, and unless that can be broken today in the 1360-1 area the bulls have nothing:
