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Thursday, 7 November 2013

Retesting the Highs

Since I wrote the commentary on my SPX charts below saying that a decent double-top setup was in place, but that I was nonetheless expecting new highs the ECB has cut interest rates and ES has made new all-time highs. Dow already made new highs yesterday and I'm expecting SPX should make a new high in trading hours today. Any high made this week is likely to be within the acceptable double-top zone for SPX to peak near here. SPX 60min chart:
As I was explaining yesterday morning, any high made this week should be made in the 1780-90 SPX range, and ideally in the 1780-5 area. That second area is equivalent to 1775-80 ES and with ES now at 1773 at the time of writing, further upside looks fairly limited unless we are to see a rare (and strongly bearish) punch up through the SPX weekly upper bollinger band. If the high runs into next week that range would be 10 to 15 points higher with the weekly upper band of course. SPX daily chart:
I was looking for the IHS on RUT to help identify a top area on SPX in the next few days, but after an attempt to break over the IHS neckline yesterday morning RUT fell away sharply to make a low under the IHS right shoulder. This pattern is busted and I am now disregarding it. In a normal week I'd be looking for a retest of the 1087 low next but with bullish looking action on ES and SPX today I'm doubtful about seeing that today at least. RUT 60min chart:
I've not posted a precious metals chart for a few days and that's because not much has been happening. That's still the case, but I'll post the SLV chart today to show the support and resistance trendlines that SLV is currently trading between. I'm expecting a break soon, am leaning bullish for that break, and would point out that the current level is a nice looking risk/reward long entry on SLV here. SLV 60min chart
The USD low may not be in yet, but the current rally has made a short term higher high while breaking over declining resistance from the high. This is very encouraging for USD bulls and while the current lows may well be retested or undercut, the odds of a big trend reversal at support on USD have improved considerably. USD daily chart:
CL rallied hard to 95ish yesterday and that too is encouraging for a big trend reversal back up soon. I'm expecting to see a hit of rising channel support before any serious trend reversal but the odds of that would improve considerably with a strong rally here to establish positive divergence on the daily RSI at the hit of channel support. That rally should ideally go higher and I have the last significant high in the 98.8 area, so anywhere up to there would be good. WTIC daily chart:
I showed a possible IHS on TLT yesterday but the setup is easier to see on TNX. If this is to play out, and I'm doubtful about that, TNX should turn down again towards the neckline here. TNX 60min chart:
If we see a dip at the open I'd be inclined to buy it in the expectation that SPX will make a new high today over 1775.22, and may well make my main target area in the 1780-5 range today. If we hit that range I'd be leaning cautiously short from there into the end of the week. That caution would mainly be due to the jobs number tomorrow, which may be a big market mover and could possibly deliver a punch over the SPX weekly upper bollinger band. If we were to see that I would be leaning much less cautiously short from the 1795 area as that punch would be a strong topping signal if sustained, and would move back into the 1780-90 area or lower by the close tomorrow if not sustained.

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