- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Thursday, 17 August 2017

Bigger Dips

The daily middle band is a, and perhaps the, classic place for a bear move rally to fail, and after three days of failing to break above the SPX daily middle band this rally failed there into today's solid trend down day.

Since I capped the SPX chart below SPX has delivered a new retracement low. I'd like to see a move down to the 2405 area next to follow the path that I sketched in on the SPX chart at the end of July. Ideally SPX would then backtest 2450, possibly hitting the daily lower band at a lower level there, and then decline to the 2320 area, very possibly making the main retracement low there and setting up a solid dip buy opportunity into the end of the year. SPX daily chart:
NDX has now made a new retracement low as well and I still have a larger target back in the 5700 area from NQ, though I'll be watching the gap area not far above for possible support. NDX daily chart:
The ES, NQ and TF futures charts below were done an hour before the RTH open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES made the double top target I gave before the open this morning and kept going. Nice classic reversal. ES Sep 60min chart:
NQ made the double top target there and kept going. The new retracement low keeps open the 5710 target on NQ, though it isn't as strong a target as the H&S target on TF. NQ Sep 60min chart:
On TF the first H&S target at 1359 has been reached. The larger H&S target in the 1348 area should be reached soon. Might see a rally first. TF Sep 60min chart:
There's a lot of talk about the bearpocalypse starting here, but I see fibonacci pullbacks as a sign of a degree of market health. Personally I have made no changes to the proportion of my holdings invested in baked beans and bullets, and I would suggest that it's perhaps a little early to be gathering on mountain tops waiting for the end of all things. That said, I think the odds do favor more downside on equity indices in the next few weeks. :-)

Stan and I were doing our monthly free public Big Five webinar on AMZN, AAPL, FB, NFLX and TSLA at theartofchart.net an hour after the close today, but Stan is having major computer issues so we are delaying that until next Wednesday 23rd August. If you would like to see that you can register on our August Free Webinars page. This week's edition of The Weekly Call is posted and the model portfolio there is up 188% in the nine months to August 5th, obviously well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Tuesday, 15 August 2017

Back On The Three Day Rule - Day Two

The decline into last week's low was slightly over 2%, so the break back over the 5dma, now at 2457/8 has put SPX back on the Three Day Rule. In the event of a daily close more than two handles below the 5dma today or tomorrow, then historically there would be a retest in the near future of last week's low at 2437. This is the highest probability historical stat that I watch. SPX daily 5dma chart:
So far the rally high is at the test of the daily middle band. That's not bullish ...... yet. On a confirmed break above the retest of the all time high opens and Stan would have an extension up to 2502 as the likely target. Obviously the daily middle band is a classic target area for a rally within a downtrend though, so a failure to break back above leans very bearish. SPX daily chart:
RUT hasn't even managed a backtest of the daily middle band, managing only a backtest of broken double top support. Again a classic rally target and fail there if RUT can't manage more. RUT daily chart:
The one ray of light for bulls here really is the hourly RSI 14 buy signal that fixed on Friday on RUT. It's not definitive, but it is suggesting more upside on RUT. If so there is strong double resistance at the 50dma and daily middle band at 1415-7. RUT 60min chart:
Overall this setup still favors the bears, but until we see that closing break back below the 5dma the bulls still have a decent shot. We'll see.

Stan and I are doing our monthly free public Big Five webinar on AMZN, AAPL, FB, NFLX and TSLA at theartofchart.net an hour after the close on Thursday, and if you would like to see that you can register on our August Free Webinars page. This week's edition of The Weekly Call is posted and the model portfolio there is up 188% in the nine months to August 5th, obviously well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.