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During Friday’s drop (which the media is characterizing as some kind of historic plunge, even though it was like 1.25%), the levels at which the equity futures slammed on the brakes was quite interesting to me.
For the /ES, I drew a line months ago anchored to the prior lifetime high (red arrow). On Friday, at the worst part of the drawdown, the /ES nailed this line almost to the penny and reversed higher (green arrow). It has pretty much undone Friday’s drop already.
In my post on the morning of Wednesday 30th July I was looking at the pattern setups on SPX, QQQ and DIA and saying that these delivered a very nice setup for at least a short time high forming there.
In my post on the morning of Friday 1st August I was looking at the first real signs of weakness on the US equity indices since the April low after the strong breaks of the daily middle bands on DIA and IWM on Thursday, and saying that confirmation was needed with further breaks of the daily middle bands on SPX and QQQ.
We saw those further breaks on Friday so it is likely that the first significant retracement on US indices since the April low are now in progress. So what next?
(more…)NOTE: The charts below are all showing the new monthly pivots.
In my post on Wednesday morning I was looking at the pattern setups on SPX, QQQ and DIA and saying that these delivered a very nice setup for at least a short time high forming here. Yesterday we saw the first real signs of weakness since the early April low.
I’ve looked in many previous posts at the importance of daily middle band support or resistance in strong trends and I looked at that in this uptrend a few weeks ago. Until yesterday there had been no meaningful closing breaks of the daily middle band support on SPX, QQQ, DIA or IWM since these indices broke back above those in late April. That changed with very strong closing breaks below the daily middle bands on DIA and IWM yesterday.
(more…)Every so often I talk about the way chart patterns form and how they can evolve, and I have some very good illustrations of what I mean by that to show you today.
When rising wedges form in a trend and break down, sometimes they are just expanding as they rise and, when we saw breaks down the initial rising wedges from the April lows on SPX and QQQ a few weeks ago, I was talking about how if further levels above were reached then the wedges were just expanding and I would redraw the support trendlines as unbroken. That would create a new inflection point as those new patterns broke down.
What I am looking for in these cases are high quality resistance trendlines to form, either extensions of the initial wedge resistance trendlines or new trendlines, and I have three very high quality examples of the latter to show you today.
(more…)
