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Monday, 17 March 2014

Wonderful Singing Voices

People really are strange. A former British politician called Tony Benn died a couple of days ago and politicians of all political stripes here have been queuing up to say something nice about him, even though he spent his political life trying to make the UK more like the USSR, happily failing to achieve anything of his main aims. One wonders what nice things might have been said about Hitler, Mussolini, Mao or Pol Pot had they spent their lives trying and failing to enslave and bankrupt the UK, and then died here in frustrated and impotent old age.

Equally with Crimea, which was never part of Ukraine before it was given to Ukraine as a gift in 1954, has never had a ukrainian majority, and has been the main reason both that pro-Russian kleptocrat Yanukovich has been elected to the Presidency twice, and that Russia is determined to keep Ukraine with its 'Sphere of Influence'. You would think that Ukraine would be keen to rid itself of this poisoned gift, but whenever changing borders are discussed anywhere everyone seems to dust off the local version of the Horst Wessel song and start singing it while vowing to make endless war to keep Calais British , or whatever the local equivalent might be.

Be that as it may, ES fell at the globex open on the Crimean Referendum result and then more than recovered. The possible H&S neckline that everyone has been watching has been hit, though a hit and reversal there would look much more significant on the SPX chart, and ES has rallied to test the daily middle bollinger band which was resistance on both ES and SPX on Friday. If ES can break back above then the obvious target would be falling megaphone resistance, currently in the 1860 area. ES 60min chart:
The falling megaphone setup is similar on SPX, with falling megaphone resistance currently in the 1867 area, exactly equivalent to the ES pattern. SPX 60min chart:
Can SPX rally back, however briefly, over the middle bollinger band? Well yes, but that looks like tough resistance, and SPX may fail there again today. The resistance looks all the stronger because on the TRAN the high on Friday was a retest of broken double-top support. The TRAN chart is telling us both to expect lower prices soon, which I'd expect in any case, but also that resistance at Friday's highs may be solid. TRAN 60min chart:
As and when we do see lower prices there is a very clear target area 1823-9 SPX. On a clear break of the daily middle band I would expect a test of either or both of the 50 DMA and the lower band, currently at 1829 and 1823 respectively. With the 38.2% fib retracement target at 1827 we are very likely to hit that target area and the retracement low could well be seen there. SPX daily chart:
The pattern setup on ES and SPX would be neatened up nicely by a rally to the 1860 ES / 1867 SPX area to firmly establish falling megaphone resistance on both charts. If we don't see that happen then most likely we will see SPX trade in a range for the next three or four days until megaphone resistance falls below the daily middle band. In that time the 1823-9 SPX range will also come into range so we could definitely see more downside in that time.

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