- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Monday, 24 February 2014

Double Tops Forming

I've mostly been looking at charts with double-tops forming this morning. First I'll show the possible major double-top that may be forming on the SPX daily chart. That would trigger a target in the 1625 area on a sustained break below 1737, but in practical terms a break below strong rising support from the 1560 low, now in the 1750 area, would look extremely bearish. This is not my primary scenario here, but I'll be considering it seriously if we should see SPX break under strong support in the 1800 area.  Short term the best reversal signals on the SPX daily chart are from divergences on the RSI 5, and we have a bearish negative RSI 5 divergence forming there now. SPX daily chart:
I was talking on Friday morning about the possibility of a short term double-top forming on SPX and was looking for a marginal higher high. As it happened we saw a marginal lower high, with a breakdown that I called on twitter as it happened, and that might be enough, though we could yet see that higher high today after a strong rebound overnight. It is already a technically decent short term double-top however, which would target strong double support in the 1800 area on a sustained break below 1824. SPX 15min chart:
Supporting this setup on SPX is an almost identical short term setup on NDX, albeit with NDX having made new all time highs and also having made a marginal higher (all time) high on the short term double-top setup there. NDX 15min chart:
My last double-top today is on TNX. The possible falling channel I showed the other day broke up quickly, but that wasn't bullish. TNX has now established a second possible falling channel and thoroughly tested broken rising wedge support while forming a technically decent possible double-top. On a sustained break below 26.75 the double-top target would be in the 25.69 area. This is a strong setup and I am assuming that this will play out unless demonstrated otherwise. TNX 60min chart:
Last chart for today is the oil chart, where on the WTIC daily chart oil has broken up hard from a double-bottom with a target in the 110.25 area. Again this is a strong setup and is a buy on pullbacks until that target area has been reached. WTIC daily chart:
Mondays have all bearish so far this year, with the Monday two weeks ago which was marginally positive. The markets were closed last Monday of course. That fits my lean today which is flat to bearish. The four handles from the RTH close on Friday that ES is up at the time of writing would already, if sustained into the close, make this the most bullish Monday in 2014 by a significant margin. I suspect that it won't be sustained into the close.

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