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Friday, 30 May 2014

Band Ride - Day Five

Yesterday completed day four of the daily upper band ride by my count and I have had a look at these over the last five years to look at the amount of time these lasted. None were longer than ten days, and by definition they had to last at least three days, so the distribution was as follows:

  • 3 Days - 3x
  • 4 Days - 5x
  • 5 Days - 6x
  • 6 Days - 4x
  • 7 Days - 3x
  • 8 Days - 2x
  • 9 Days - 2x
  • 10 Days - 1x

The most common and median length was therefore five days and that included the band rides immediately preceding all three of the spring highs in 2010 through 2012, one of which topped on the last day of the ride, and the other two of which came within ten points of the spring high, which was made on a retest shortly afterwards.

On the daily chart he obvious target is still rising wedge resistance in the 1930 area. That would be likely to be hit today or on Monday, which is the statistically leaning bullish first day of June. SPX daily chart:
Negative divergence is building on the 60min RSI, which is suggesting that after the 1930 area resistance trendline is hit, there will be a decent retracement from there. There is the possibility that the wedge will overthrow a bit, but if that happens today I'd still be expecting a close at 1930 or under. SPX 60min chart:
On the weekly chart the weekly upper band closed yesterday at 1922, and may close as high as 1925 today. Any close under 1930 shouldn't be a strong punch over the weekly upper band. That's important as such a punch would strongly suggest a 50+ points retracement in the near future, though as the spring high is most likely close a punch over this here would be both less difficult and significant than usual. More important is primary rising channel resistance in the 1940 area, which should be rock solid resistance here. SPX weekly chart:
NDX is retesting the current all time high here and this is a possible fail area, though the rising wedge target is still some way above. NDX 60min chart:
RUT is looking very weak here still, and has failed so far to even retest the level of the opening spike on Tuesday. Unless this changes soon the double bottom on RUT is likely to fail at the break up, which is, as I have mentioned before regularly, where these patterns generally fail when they do. RUT 60min chart:
Now that the falling megaphone on TLT has broken up I have retired my early January projection, which turned out to be spookily accurate, and done a new projection over the next year showing what I am expecting from here. Obviously this is just an educated guess but for whatever reason over the last four years my big picture bonds calls have been very accurate, and this scenario hangs together very well with my long term bonds charts. TLT daily chart:
AAPL is approaching the 640 area target trendline I showed as my target on 15th May, and is starting to look like an interesting short. That's not just due to the channel, as if you look at the daily RSI 14 over the last two years you can see that reaching the 80 level has been a decent stand-alone short signal over that period, and I would note that rising channel support is currently in the 525 area. AAPL daily chart:
The chances are that the current daily upper band ride will end today or Monday, and further the odds are very decent that the high made at the end of this band ride will be within 20 points of the spring high that I am looking for soon. I'm expecting a hit of 1930 SPX today or Monday and will be looking for short entries there.

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