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Thursday, 4 October 2012

Bullish Setups Here

SPX broke up slightly from the middle bollinger band yesterday which leans slightly bullish, and the bollinger bands are pinching on the daily chart, which as with when they were pinching around the 1400 area, is indicating that a significant trending move is coming soon. Overall I'm leaning towards that move being upwards for reasons I'll explain:
Now on the SPX 60min chart there is a symmetrical triangle that has formed during this consolidation. That hasn't broken up yet but if we see a break up during trading hours that will be a bullish break with a technical target in the 1463 area and a likely target at a retest of the highs area. I've mentioned before that a failure to hit channel support here suggests a return to hit or break that channel support trendline later before another hit of channel resistance, so this may well be only a short term bullish break if we see it:
Supporting a possible bullish break here is TRAN, with broke over the first double-bottom trigger level yesterday with a target in the area of the late September high in the 5003.28 area. On a break over that a larger double or W bottom would trigger with a target at strong resistance in the 5130 area:
The short term H&S forming on NDX seems likely to fail here, but I also mentioned earlier this week that there is a possible H&S forming on AAPL. That possible H&S has just completed the head and would ideally bounce here, taking a couple of weeks to form the right shoulder, with the ideal right shoulder high in a week or so in the 680-95 range in a week or so. Obviously that could fail too, but as I said a couple of days ago the negative divergence on the weekly RSI here on AAPL has been seen five times in the last 20 years and has led to a substantial retracement all five of those times. I think AAPL is great and I love their products, but the technicals still say to look for a high around here and that technical signal is what it is:
I posted a possible IHS forming on EURUSD yesterday morning and sketched an idealized path for that to complete forming and break up. So far it has followed that path and since I capped the chart below it has completed forming. On a break above the neckline that indicates to 1.313 and a probable retest of the highs slightly higher:
I've been looking carefully at the GBPUSD chart this morning as GBPUSD broke channel support yesterday. That looks bearish but the falling wedge and positive RSI divergence are arguing strongly for a bounce here. On a break above falling wedge resistance the upside target would be slightly below the highs. I'm not happy with this version of the GBPUSD chart but am running out of time. I will post a better version on twitter later before the open:
CL broke down hard yesterday, but I'm leaning bullish there too. Why? Well the double-top target I gave from the high was in the 87.9 area and that has now been made, and I was looking for strong support in the 87.5 area and that hasn't been broken. There's no positive RSI divergence yet but I'm thinking the swing low may be in or very close. 87.5 is also a potential H&S neckline, though the rise into the pattern is shorter than I like, and if that continues to form we would see a big bounce here with an ideal target in the 93.4 area. I have declining resistance from the high in the 91.4 area:
Overall the short term picture here is leaning bullish, with confirmation breaks needed on SPX above declining resistance from the high and on EURUSD above the IHS neckline. If we see those, expect more upside. Longer term the setups on SPX, GBPUSD and CL are suggesting that this move up may fail after a few days, and then we might well see a larger retracement which on SPX would target very strong support in the 1390-1400 area. Earnings seem likely to disappoint so that would definitely be something to bear in mind. We might see a gap fill attempt today and if we do that would look like a very buyable dip.

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