- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Tuesday, 24 January 2023

Very Important Resistance Area Here

The possible H&S I was looking at on Friday morning didn't form and the move to retest the prior high has done some interesting technical damage to the bear case, so I wanted to have a look at that this morning.

The SPX hourly chart below shows the break over declining resistance from the all time high, which held perfectly at the December highs and established a high quality three touch resistance trendline.

On the bigger picture there is also a decent case that a falling wedge has formed from the all time high on SPX that could be a bull flag. That flag wedge would have underthrown bullishly at the October low and this might therefore be the start of a break up towards a possible retest of the all time high.

For a variety of reasons I am skeptical about that happening here but this is nonetheless certainly an interesting development and I'll be watching carefully to see whether this can follow through to the upside and convert the main downtrend resistance, which is of course the 50 week moving average.

SPX 60min chart:

The possible bull flag on NDX is nowhere near as convincing, but there was also a break over declining resistance from the all time high on NDX yesterday.

NDX 60min chart:

Main resistance for the current downtrend of course is at the 50 week MA, and there were close touches of this at the August and December rally highs. That is now at 4030.04 so the high yesterday was another close touch. If bulls can break and convert this to support then the possibility of a retest of the all time high will become an option on the table.

SPX weekly chart:

In the short term SPX is retesting the daily upper band so there is some resistance here. No current negative divergence on the hourly chart but that could be easily fixed with a retest and fail at yesterday's high.

SPX daily BBs chart:

On the 15min chart the obvious pattern from the December low is a rising megaphone and, if so, the obvious resistance trendline would be in the 4080-5 area at the moment. Obvious SPX could be on the way to a retest of the December high and, if so, that is another potential point of failure, setting up a possible double top to retest the October low. We'll see.

SPX 15min chart:

How significant is this resistance break? Well even if the 50 week MA breaks and converts to support, a retest of the all time high is not the only option. SPX might just be establishing a new rally resistance trendline and, if seen, I have a possible channel resistance trendline not far above the December high that I'd be keeping an eye on.

We are are holding our monthly free big five and key sectors webinar an hour after the RTH close at 5pm EST on Thursday 26th January. If you'd like to attend you can register for that here or on our January Free Webinars page.

My next post should be on Thursday or Friday before the open.

If you are enjoying my analysis and would like to see it every day at theartofchart.net, which I co-founded in 2015, you can register for a 30 day free trial here. It is included in the Daily Video Service, which in turn is included in the Triple Play Service.

Friday, 20 January 2023

Turning As Expected So Far

I'm finding it difficult to get back into doing more than one post a week. I shall try hard to get two out next week.

On SPX a week ago I was looking for a reversal under declining resistance from the all time high, and ideally a decline and high retest to set up a possible daily RSI 5 sell signal. I got the first of those but not the second.

The decline from the high was too large to set up the RSI 5 sell signal and as time goes by, unless we are going to see a break of declining resistance from the all time high, a high retest is looking less likely as soon it might need to break that resistance to retest the current high.

Unless we are going to see that break then the short term high is likely made, and I'm watching a possible H&S pattern that may well be forming here with a target that would take SPX back to the last short term low at 3764.99.

SPX daily chart:

On the weekly chart main resistance at the 50 week MA held again, currently at 4036.42, and if the short term high is made then then next obvious target is another test of main support at the 200 week moving average, currently at 3568.75. If bears can manage to break and convert this to resistance then this would open potentially much lower targets.

SPX weekly chart:

In the short term SPX is rallying at the daily middle band, now at 3881.54, which is the obvious level to see a rally. If the short term high is in, this will then need to be broken and converted to resistance to open up lower targets.

SPX daily BBs chart:

The hourly RSI 14 sell signal that was brewing last week fixed and made target. No buy signal at the low larger than the weak RSI 14 buy signal that has fixed on the 15min chart.

You can see that declining resistance from the all time high is now in the 4025 area, just a few handles above the January high so far at 4015.39.

SPX 60min chart:

What I think may well be happening here is that this rally is establishing a right shoulder on a possible H&S that if it forms and makes target would look for a retest of the December low at 3764.49. Ideally the right shoulder high would be in the 3950 area and I will be looking for a possible high there.

SPX 15min chart:

We are are holding our monthly free big five and key sectors webinar an hour after the RTH close at 5pm EST next Thursday 26th January. If you'd like to attend you can register for that here or on our January Free Webinars page.

I will endeavour to ensure that my next post is on Tuesday or Wednesday before the open. Everyone have a great weekend. :-)

If you are enjoying my analysis and would like to see it every day at theartofchart.net, which I co-founded in 2015, you can register for a 30 day free trial here. It is included in the Daily Video Service, which in turn is included in the Triple Play Service.