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Tuesday, 25 March 2014

SPX Rising Channel Broken

The rising channel on SPX broke yesterday and I'm leaning towards the view now that the Spring high was made last Friday and that SPX has started the move to retest broken resistance at the 2000 and 2007 highs that I've been expecting to see this summer. Obviously the bears have dropped the ball a lot of times in the last few years, but I would expect this setup to resolve down. SPX broke back below the daily middle bollinger band yesterday and as long as that holds on a daily basis then the next target is the daily lower bollinger band in the 1837 area, currently just under smaller double-top support at 1839/40. SPX daily chart:
Now that the SPX rising channel has been broken the next step is to break below the 1850 range floor that held yesterday and then break double-top support at 1839/40. that would open up the double-bottom target at 1795. The bounce yesterday stalled at the retest of broken channel support and the 50 hour MA. That resistance may hold today but we may bounce higher without weakening the overall topped or topping setup here. SPX 60min chart:
One other priority for bears here is to break the rising channels that are still intact on Dow and TRAN. Dow tested rising channel support with SPX last week but has outperformed since. Dow 60min chart:
On other markets I have charted up FVX (5yr treasury yields) over the last twenty years and would like to show the inflection point approaching there. Overall the setup is bullish and the bull market from 1980 most likely ended in 2012. However there is no bottoming pattern yet and there is a possible double-top forming that would retest the 2012 low area. This of course would be a good fit with the face-ripper rallies on bonds seen at the ends of QE1 and QE2. I'll be watching the RSI 5 on a retest of the current rally high at 18.88 to see whether we are likely to see reversal there. FVX weekly chart:
For today we may see a bounce higher and if so I'd be looking for strong resistance in the 1874/5 area. Key support is at yesterday's low at 1850.

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