SPX is at a potentially significant inflection point here, with a setup for a possible sharp retracement. SPX has broken down from a short term rising wedge and formed a possible double top. A possible hourly RSI 14 sell signal is brewing and the obvious first downside target on SPX in the event of a significant reversal here would be channel support in the 2740 area. We are looking for a sharp retracement soon and it could well start here.
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We did our monthly free public Chart Chat yesterday and, if you missed that, you can see the recording posted on our June Free Webinars page.
ES/SPX has been forming a likely large bull flag over most of the last month, and the flag pattern is the unusual and very poorly named broadening formation, right angled and descending. I’m trying to think of a catchier name.
Be that as it may I like these patterns and, on ES overnight, that pattern has been starting to break up. The full target would be in the 2800-5 area, though we thinking we might see a retracement/backtest from the 2765-75 area, if the island top gap from the March high into 2752.021 can now finally be filled. Our expectation is that this gap should be filled today.
Interesting setup on SPX here as the holiday week begins. SPX is now testing the larger double top support that I was looking at last week and has broken slightly below double top support at the open. From here there are only two high probability options.
The first option is that SPX continues down towards the double top target in the 2661.50 area. A sustained break below 2690 from here likely seals that for the bears. The second option here is that the double top fails and rejects at the break. That’s what I would call a Janus bull flag setup, and the target would be a full retest of the May high at 2742.24. A strong break back over weekly pivot on SPX at 2723.65 likely seals this for the bulls, though by that stage SPX would be most of the way back to 2742.24 of course. As a general rule I’d expect to see one or the other target reached this week.
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:
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…)
I was just thumbing through the posts from early February when the Dow lost thousands of points in a matter of days and then VIX exploded above 30. My, my, how quickly things change. We have now returned to a VIX that is just barely hanging on to 13 (it even when sub-teens last week):
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…)
Our monthly free public Chart Chat is on Sunday, so if you’d like to register for that, you can do that on our May Free Webinars page.
SPX found support on Tuesday as expected, and is now testing the next level of resistance at triangle resistance on SPX. We’re expecting a retracement soon and I was hoping to see triangle resistance broken clearly before that retracement, to make the next retracement low an unambiguous buy, and my wish has now been granted. So far the day is looking trendy, so we may not see the high into that retracement today. Partial Premarket Video from theartofchart.net – Update on ES, NQ and TF:
I mistakenly said last week that our monthly free public Chart Chat was last Sunday. It is actually next Sunday, so if you’d like to register for that, you can do that on our May Free Webinars page.
The NQ triangle broke up last week and ES broke up from declining resistance and back over the daily middle band. The short term low is likely made and ES/SPX has been backtesting broken resistance.
There is some scope to go lower, with the obvious support levels on ES at the weekly and monthly pivots, at 2645.5 and 2639 respectively, but these look like bull flags forming so far, and SPX has come close to a test of short term support at the 50 hour MA at 2653. That may be close enough. Partial Intraday Video from theartofchart.net – Update on ES, NQ and TF: