- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Friday, 23 September 2022

Approaching The Low Retest

I was saying in my premarket video on Monday morning that ideally what we would see this week is a rally on Mon/Tues, and then another leg down on Wednesday through Monday next week in line with the very bearish historical stats for these four days. So far that has delivered well, with FOMC on Wednesday delivering the next leg down I was looking for. If you'd like to hear that premarket video every morning that is included in our Daily Update Service and you can get a 30 day free trial here.

On Friday last week I was looking for a test of the daily lower band on SPX. That was hit on Wednesday and yesterday, so there is a possible daily lower band ride starting. The downtrend is strong and at the moment there is no meaningful positive divergence on the US indices that I follow. The 2022 low is at 3636.87, and that is likely to be testing within days.

SPX BBs chart:

SPX hit yesterday the possible target trendline I drew after the rally high at 4119 and that held for a couple of hours before breaking slightly. Overnight that is looking likely to break hard this morning and there is no positive divergence on the hourly or 15min charts, so once SPX breaks and converts 3700 the retest of the 2022 low at 3636.87 is the next big level.

SPX 60min chart:

On NDX the target trendline I drew is now in the 11175 area. That may well be hit this morning too and is possible support. If broken, or hit next week, the retest of the 2022 low is at 11037.20.

NDX 15min chart:

On IWM the target trendline I drew is now in the 169.50 area. That may well be hit this morning too and is possible support. If broken, or hit next week, the retest of the 2022 low is at 162.78.

IWM 15min chart:

On Dow the target trendline I drew is now in the 29650 area. That may well be hit this morning too and is possible support. If broken, or hit next week, the retest of the 2022 low is in that area. Dow would likely be the first index to reach that.

INDU 15min chart:

This has been a strong trend down, and if 3700 SPX can be broken and converted to resistance, I'd expect to see a new low on SPX for 2022 today or Monday. The daily lower band closed yesterday at 3753 with the 3sd lower band closing at 3650.74 so as both should be lower at the open, the 2022 low retest is in range today without a break of the daily 3sd lower band. If we hit the 3sd lower band today or Monday that would be a good indicator for a possible strong rally.

Today is Friday, and those usually aren't that exciting, so we may see a rally attempt today. If not, then we may well see a new low for 2022 today, with a decent chance of at least a decent rally after that low retest. If we don't see that today then we likely see that on Monday.

We did a trading commodities webinar yesterday and gave the usual three trade setups and designs. If you missed that you can see that here or on our September Free Webinars page. We are doing our monthly free public webinar at theartofchart.net on the Big Five and Key Sectors after the close next Thursday and if you'd like to see that you can register for that here or on the free webinars page.

My next post should be on Monday before the open. Everyone have a great weekend. :-)

Friday, 16 September 2022

The Downside Is Strong In This One

I was saying in my post on Monday that a fail at the test of the daily middle band generally happens in one of two ways. The first way is the usual test and fail, and the second is a break above that is rejected the next day. Obviously SPX took the second option and delivered a memorable rejection candle. That was bearish with an obvious minimum target at a retest of the daily lower band, which closed yesterday at 3823. I'm expecting that target to be reached, and likely lower. A retest in the next few weeks of the 2022 low at 3636.87 is now firmly on the table as my primary scenario.

SPX BBs chart:

On the SPX chart there was a decent quality double bottom that formed and broke up on Wednesday afternoon, but rejected back into a lower low. On Thursday there was a really nice double bottom option looking for a backtest of the 4000 area, supported by a lot of 15min and hourly buy signals across the US indices and futures. That too broke up and then rejected into back into a lower low. This downside move has shown a lot of strength in those two rejections and I think the next real support is likely to be in the 3800 area.

In the short term SPX in still on a 15min buy signal and the best looking support trendline option is now in the 3790-3800 area.

SPX 15min chart:

On the NDX chart the best looking support trendline option is now in the 11500 area.

NDX 15min chart:

On the IWM chart the best looking support trendline option is now in the 173 area. That may be hard to reach on this move as IWM has held up the best of the US indices so far this week.

IWM 15min chart:

On the Dow chart the best looking support trendline option is now in the 30150 area.

INDU 15min chart:

It is opex Friday today so the market often doesn't move much after lunch. The positive divergence here is telling us that we could see a rally soon, but the failure to sustain a rally on either Wednesday afternoon and yesterday suggest that SPX will be testing 3800 before there is another serious attempt at a rally.

The historical stats for next week lean neutral on Monday and Tuesday and then there is are four consecutive trading days from Wednesday 21st September through Monday 26th September which all lean significantly bearish. Ideally therefore we would see the next rally Mon/Tues next week and then another leg down after that. I'm expecting to see a retest of the 2022 low at 3636.87 in the next few weeks, and that might well be sooner rather than later.

My next post should be on Monday before the open. Everyone have a great weekend. :-)