- This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.
- I will be answering questions and responding to comments, so feel free to respond to any posts and I will see your comment even if it is not on the most recent post.
- If you're interested in seeing any intraday charts I post, I do that on twitter, and my twitter handle is @shjackcharts.
- The charts in the posts are as large as I can practically make them. if you would like to look at one more closely, click on it, and the link will take you to a larger version at screencast. If you click on that again, you will get a full page version, and can use the resizing function on your browser to enlarge parts of interest further.

Tuesday, 8 October 2013

Testing Serious Support

ES made a low at 1662.75 overnight, and I'm treating the targets on the ES chart I posted yesterday as hit. I have that as a good hit at rising support from November, and within three points of the daily lower bollinger band, so a technical hit of that. These are both decent support on the ES chart, though I could redraw that trendline for a hit in the 1658.50 area, so ES could go a bit lower without breaking support. ES daily chart:
I have been looking very carefully at the trendline and pattern setup on SPX this morning and on closer inspection the falling wedge that broke up on Friday isn't of high quality and I've discarded it. However I have found a perfect falling channel that was established at the high on Friday. On this 60min chart the important levels are the 61.85 fib retracement at 1666.50, the H&S target at 1660, and falling channel support in the 1655-8 area (depending on when it is reached. SPX 60min chart 1.5Mo:
Looking at the SPX 60min chart since the beginning of May the overall setup is fairly obviously a rising wedge that overthrew at the last high. The key level on this chart is wedge support, as that is also rising support from the November 2012 low and is the key support trendline here. That is at 1662/3 today. SPX 60min chart 5Mo:
On the SPX daily chart the close yesterday was three points below the 50 DMA which I am treating today as broken and now possible resistance (at 1679.5). The support levels below are the daily lower bollinger band in the 1670 area, and the 100 DMA at 1662. SPX daily chart:
The Vix punched strongly over the daily upper bollinger band there yesterday. I know many analysts will be looking carefully for a Vix Buy (equities) Signal here, but I've looked at those in detail over a long period and I haven't found performance to be of much interest. What I would say is that a punch like this does tell us that the market is short term oversold and that we may see a decent bounce (or more) start very shortly. There are eleven previous instances of punches like this in the last year, and nine of those saw a decent bounce starting within a trading day. That is an unusually bullish period to use as an example, but regardless of that a punch like this is a strong reminder to start to watch out for a reversal level for at least a rally. Vix daily chart:
I'll leave the charts at those five today as I'm not feeling that great so far this week, but I will sum up by saying that the key support level and obvious next target here is at 1662/3 SPX. Rising support from last November is at 1662/3, the 100 DMA is at 1662, and the weekly middle bollinger band is at 1663. If that level breaks that would be a very significant technical break, and though we might still see a decent rally afterwards, I wouldn't expect a low under 1662/3 to hold long. Short term it would be a very attractive long entry for a bounce of whatever size.

No comments:

Post a Comment