- This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.
- I will be answering questions and responding to comments, so feel free to respond to any posts and I will see your comment even if it is not on the most recent post.
- If you're interested in seeing any intraday charts I post, I do that on twitter, and my twitter handle is @shjackcharts.
- The charts in the posts are as large as I can practically make them. if you would like to look at one more closely, click on it, and the link will take you to a larger version at screencast. If you click on that again, you will get a full page version, and can use the resizing function on your browser to enlarge parts of interest further.

Monday, 28 July 2014

Other Markets Update

This is my vacation post for other (non-equities) markets. For equities check my last post from earlier today. Normal service resumes next Monday 4th August.

Last time I was looking at EURUSD I said that I was expecting a test of rising wedge support in the 1.35 area. EURUSD made that and then slightly lower to test the 200 DMA, so the rising wedge is now broken. Unless we see a fairly fast recovery to new highs I'm now looking at targets for EURUSD in the mid-120s. I've been watching this setup for months in the expectation that there should be a strong USD rally at the end of QE3 so I'm expecting this to resolve down. EURUSD weekly chart:
I've had a look at my May projection for TLT and have adjusted that for the rising channel that has since been established. The obvious next target is channel resistance in the 117.5 to 119 area, depending on the time taken to reach that rising trendline. TLT daily chart:
Oil has retreated sharply recently and may retrace a bit further. Overall though I have USO in a rising channel from the 2012 low, and my overall bias remains bullish, with the obvious bigger picture target at the 2012 high at serious resistance just over 42. I have a possible retracement target in the 35.5-36 area, which should match up with CL support in the 97/8 area. USO daily chart:
The overall picture on silver looks bullish, with a possible double-bottom forming and declining resistance from the 2011 high broken. Short term though the RSI setup is bearish and silver is currently making lower highs and lows. The next obvious target is under 18.61 and may retest broken declining resistance from the 2011 high in that area. Silver daily chart:
I'm on vacation with a laptop, a lousy internet connection, glorious scenery and beautiful weather for the rest of the week, so I may not post much more before normal daily posts resume on Monday 4th August.

Candidate Top Take #24

Greetings from the New Forest (established 1079 AD) in Hampshire, UK. The scenery and weather are lovely, and my internet connection is very slow, so I have been taking some genuine time off to relax rather than following the markets too closely. Things are looking interesting though so I thought I'd take some time today to do two posts, one on equities and the other later on on bonds, precious metals etc.

On equities SPX made a marginal new high last week and has pulled back sharply from that setting up a possible short term double-top. This isn't the first time this has happened in recent months, so there isn't much to get excited about as yet, but the overall setup favors at least some more downside this week, so I thought I'd have a look at that today. On the daily chart SPX tested the lower band on Friday and has gone lower this morning. There is double support in the 1956 area at the intersection of the lower band and broken wedge resistance, and primary support is at double-top support at 1952. A conviction break below double-top support would target the 1914 area. SPX daily chart:
On the 60min chart the action on Friday was within a falling channel that I thought might be breaking up slightly at the close but in fact is still intact. If that breaks up today I'd be looking for a rally to the 1982.5 - 1985 area, and if that held, then I'd expect another leg downwards. There is strong resistance at the 50 hour MA, currently in the 1979 area, and if this downtrend is stronger than I am expecting, then that would most likely be solid resistance. SPX 60min chart:
There is a very decent argument for a stronger pullback here that need not be anything more than a decent dip to buy. I have a decent resistance trendline established on NDX here but a retracement to establish rising support from the 3414 low. The obvious target would be a retest of the 3837 low, though I have a possible alternate target in the 3875-90 area. NDX 60min chart:
This post is late up due to my slow internet connection and having to work on a laptop, so I'll post an intraday chart showing the falling channel from the highs. SPX 1min chart intraday:
The short term topping setup here is decent, and if we see a conviction break below 1952 SPX then a move to the 1914 double-top target would signal that a topping process on SPX would have started. If SPX can hold the 1952 area, then this retracement should just be more consolidation and compression before a larger move up.

I'll be doing a second post looking at bonds, precious metals, oil etc later on today.

Saturday, 19 July 2014

The Russell 2000 Conundrum

Since the end of 2012, the bears have been pathetically weak on every timeframe over hourly. It looked like they might have recovered some mojo on Thursday, but the strong rejection of those lows on Friday, with the close back over both the daily middle band and the 50 hour MA, killed off that impression fairly effectively. While SPX is making lower highs the bears aren't entirely out of the game, but unless we see the 1952 low taken out, it seems a reasonable assumption that SPX is just consolidating in a range before the next move up.

In terms of the stat I've been following I'm writing it off unless there is a strong break below the daily middle band early on Monday. If we see that then the target is a test of the 1952 low. If not then the last day for that target to be hit on the stat is Monday, so it dies at Monday's close. As it is the stat performed reasonably, with a lower high and then a break down below the middle band to a low only six points above where the lower band closed the week. I'd be surprised to see anything more on this. SPX daily chart:
What about the H&S on RUT though? That just retested the H&S neckline on Friday and still looks entirely ready to head down towards the H&S target in the 1090 area. Well if SPX breaks up hard here then we might well see RUT rally to the 1170 area, and a break over 1170 would kill off the H&S. It may be that this will still play out however and if so, then that may keep SPX from breaking up with any force and keep it in a consolidation range. RUT 60min chart:
So what's the takeaway here? Bears are still six feet under from a technical perspective, and the bear hand breaking up through the earth in front of the headstone on Thursday seems to have just been a lost rat. RUT still looks dire and I can't see any obvious signal of a low there. If SPX breaks up without a strong rally on RUT, then it may be a slow business. My suspicion is that we are in for a two way and mainly sideways market for the next week or two which will at least please the daytraders.

I'm on holiday for the next two weeks so posts will be sporadic.

Friday, 18 July 2014

Dial M for Murder

There was an interesting comment made to me yesterday that the shooting down of the Malaysian Airlines flight over Ukraine helped the bears considerably, and that's true, up to a point. It is something I have noticed regularly before at big inflection points, and it's obviously not the case that the patterns can somehow see into the future. I think there is a relationship there but logically it must be that if there is a strong bear setup like this, then the right news trigger will set the ball rolling with an apparent reaction to the news that is disproportionately larger than the reaction you might see to similar news at other times. We've all seen the markets shrug off bad news many times before, but when there are decent bear setups in play the market is showing a willingness to reverse that any bad news can then set strongly in motion.

Obviously the investigation into the extent that Moscow was responsible for this very avoidable tragedy is just getting started, and we may well see more geopolitical shockwaves from this in current days, though it's important to keep this in proportion. No war is likely to start due to this tragedy, and it's even possible that it may act as a catalyst to end the current Russian insurgency in Ukraine.

We've really had some great volatility this week. Yesterday was the most volatile day yet with a big gap down, a big gap fill that recovered +15 from the ES overnight lows, and then a plunge down to break the daily middle bollinger band at the close. Obviously the stat I've been following for the last week is very much in play here and the target for that stat is the 1949-53 ES area at the test of the last low and the daily lower band, to be hit today or on Monday. That level has been tested on ES overnight, but the target needs to be hit in regular trading hours to satisfy the stat, so I'll be looking for at least a retest of that low by the close on Monday. SPX daily chart:
So what then? I've been considering this carefully, and would say first that there is impressive support at the last low at 1952. Not only is the daily lower band just below, but there is also strong trendline support both from the rising channel from the 1814 low, and also the broken rising wedge resistance trendline from the 1737 low. That is some strong support and the stat I've been following does not take SPX through that, as two of the three previous candles made higher lows and went directly on to new highs.

The third previous candle does provide some support, as in that case the high was the second high of a possible double (or M) top, as is the case here, and the daily lower band was at the support / trigger level for that double-top, as is also the case here. In that case the hit of the lower band broke below it and double top support to make a lower low, then there was a strong bounce before SPX went to the double top target. After that SPX reversed back up and made new highs within a few weeks.

If we are to see that happen here I'd therefore be looking for the 1952 low to be broken, as well as the SPX lower band in the 1949 area. If we see that then the double top target would be at 1919, very close to rising wedge support from 1737 low. As long as that trendline holds the overall uptrend here is not threatened. If that should break then markets might retrace a lot further. SPX 60min chart:
Why am I considering this possibility seriously? Mainly because the RUT H&S I have been watching broke down hard today with a target in the 1090 area, and while SPX is within striking distance of the main target, RUT clearly is nowhere near it. If this H&S on RUT plays out to target then SPX might well break down from this double top and make that target at a similar time to RUT making the H&S target. That would put both SPX and RUT near key uptrend support, which would be a strong buy as long as those levels were not broken, though in the case of RUT, that would only be a strong buy from a technical perspective, as it's hard to get excited about buying opportunities on an index where the P/E ratio still wouldn't have dropped below 65. RUT 60min chart:
NDX is also supporting more downside, with a double top that has broken down with an effective target in the 3837 low area. That low is also double top support and on a sustained break below there the double top target would be in the 3730 area. NDX 60min chart:
How much should one read into the moves on a big news day? Well in the past I've noticed that support or resistance breaks seem just as valid on big news days as on other days, so I was watching the rally on bonds with great interest yesterday. It was strong enough that TNX broke down from the current megaphone with the obvious next downside target at falling wedge support in the 23.25 area, as long as yesterday's break holds. TNX 60min chart:
That puts bonds back on the track I laid out on TLT in May, with a likely move to test the 2012 highs that could well be the second high of a major double-top. Here is that chart again to refresh memories. TLT daily chart:
EURUSD has finally made it to test rising wedge support, as I have been predicting for the last three months. If we see a break downwards here I would have an H&S target in the 1.30 area. This is an important inflection point for EURUSD and USD.  EURUSD daily chart:
The retracement low should not be in yet on SPX, so bounces like the current one should be shortable. Resistance levels for the current bounce that I am watching are the daily middle band and ES weekly pivot, both in the 1967/8 SPX area, and the 50 hour MA at 1971. Ideally none of those would be broken before SPX tests the last low at 1952, and very possibly the SPX daily lower band in the 1949 area. On a sustained break below 1952 the double top target would be strong support in the 1919 area and, looking at RUT and NDX, I'd be giving that 50% odds of happening here. If that does happen, it might well happen fast.

I'm on holiday the next two weeks, so posts will be irregular over that period. I'm expecting to have a post out on Monday & will be using twitter to post interesting charts as I see them.

Thursday, 17 July 2014

Bearish Setups

SPX just missed hitting the daily upper band yesterday and has retraced hard overnight. The daily middle band is at 1967 now and if that can be broken then the obvious target is the daily lower band, currently at 1949, with a likely hit tomorrow or Monday. SPX daily chart:
There are two double top support levels in play here, and they are at 1965 and 1952. I'm going to disregard the 1965 one as in my view it is oversized compared to the preceding trend. If this is valid at all then the target is the low on the preceding trend at 1952. The larger double top would target 1919 on a conviction break below 1952, and that is the current level of rising support from 1737, so I'm not disregarding that as a possibility. What I would say though is that my stat from last week's candle gets us to the daily lower band and no further, so the 1952 area may well hold on this retracement. SPX 60min chart:
At the close yesterday there was a decent rising wedge from the 1952 low, and that we may well see SPX gap below wedge support at the open. If that breaks then the technical wedge target would be back at 1952. SPX 15min chart:
It seems likely that the H&S on RUT that I posted on twitter on Tuesday will break down with a target in the 1090 area. That won't of itself harm the bull case here. RUT must however hold the larger double-top support area at 1080, as a sustained break down there would damage the ongoing bull case a lot. RUT 60min chart:
I've taken some flak this week over my looking at the rare candle stat from last Thursday and the RUT H&S. I'm not going to say 'I told you so' but I would say two things here. The first is that I don't want people ever thinking that I don't post these things because I don't see them. Is that vain of me? Possibly but even so. The second thing is that sometimes, even in a very strong bull trend like the one we have been seeing since October 2011, these setups play out, as these seem likely to do. That makes them interesting. If you just can't bear to read any suggestion that the market can ever retrace even a short distance, then there are message boards on Yahoo that can shade your eyes from such heresies. I am an analyst, not a cheerleader.

Wednesday, 16 July 2014

Testing The High Again

That was a very pleasant change of pace on SPX yesterday, with almost a test of the high, and then a decline to test the daily middle band, and since then a recovery in the afternoon and overnight back to test yesterday's high. Short term this puts SPX at a fork in the road.

On the SPX 60min chart there is a possible double bottom targeting the 1995 area if the current 1985 high can be broken with confidence. There is also a possible double top setting up with a target in the 1945 area on a break below yesterday's low.

The historical stat I have been watching since last Friday suggests a test of the highs here and then a fast decline to test the daily lower band, currently also at 1945. The daily lower band is rising fast however and may well be over the last low at 1952 by the time it would be tested. That fits the stat too, as only one of the three previous instances made a lower low at the lower band touch. SPX 60min chart:
Will this short term bear scenario play out? Maybe, though it's hard to get excited about bearish setups nowadays. What I would say though is that if this stat does play out, it adds nothing to any larger bear case. none of the three previous instances were anywhere near a significant high, and in all three instances new highs were made soon afterwards. SPX daily chart:
So what else is there to suggest that this short term bear scenario might have a shot here? The Russell 2000 chart. I shorted the start of Yellen's comments yesterday morning because there's really nothing that she can say that would please bulls here short of a major policy change on QE. QE3 is winding down, and likely to end altogether in October, and the Fed has already indicated that they will seek to keep interest rates low for years to come. There's not much left to announce that could be interpreted bullishly unless policy on QE changes.

What she said that was interesting though was that small caps appeared overvalued. What was she talking about? With the P/E ratio on RUT beaten down this year from the 100 area to a modest 76 it's hard to say, but if there are any more comments along these lines today it may trigger an important support break on the RUT chart, where there is a clear H&S targeting the 1090 area. if that plays out on RUT on the next few days it's hard to see other indices rising much in that time, and that touch of the daily lower band on SPX would look pretty reasonable. We shall see. RUT daily chart:
The move down on oil has been very fast. I have a possible falling megaphone on USO and we could see a bounce here. I have a possible H&S neckline in the 35.96 area that I'll be watching. USO 60min chart:
GLD made a significant support break yesterday and retested the broken trendline before falling away. More downside seems likely. GLD 60min chart:
ES has reached 1977.5 (1984.5ish SPX) overnight and looks very short term overbought. I'm expecting to at least see some retracement before that area can be taken out with confidence. That retracement might well develop into a move towards the SPX daily lower band, if the daily middle band, which has held as intraday support on two of the last three trading days, can be broken with any confidence. Short term support is still at the 50 hour MA, currently at 1970 SPX.

Tuesday, 15 July 2014

Shaking the Tree

I've had a few questions about the candle stat I've been looking at and answered those on twitter yesterday. Only two of the reversals made a lower low at the hit of the lower band and all went on soon to make new high. This isn't a particularly bearish stat on the bigger picture, it is just striking that all three of the past instances of these candles going back to 1993 all then hit the daily upper band on SPY in 5 to 7 days after this rare candlestick, and then plunged to the lower band in the two to three days after that. Will that repeat again here? Who can say? I'll be watching to see whether it does with interest though, and if it does, it should set up a decent buying opportunity there.

If we do see a move to retest the upper band, or close to it, then that is now at 1986, just above the current all-time high. The SPY upper band should be a couple of points lower and two out of three previous instances made marginal lower highs. SPX daily chart:
On the SPX 60min chart main support is the 50 hour MA at 1971 and I'll be leaning bullish as long as that is not broken with confidence. SPX 60min chart:
I have a possible rising channel forming from 1952 and if that holds then we may well see a test of channel support and the 50 hour MA at 1971 this morning. SPX 15min chart:
The short term bounce setup I was looking at on CL yesterday morning has come apart on the break below 100, but the chart I did for this morning is still relevant as it shows my preferred main target for this move at 96. At this rate that could be reached sooner rather than later. WTIC daily chart:
Unless we see a break back below the 50 hour MA on SPX I'm leaning bullish here. If we see slow sideways to up action that would fit with the stat I'm watching, which would have the intraday test of the SPY daily upper band between Thursday and Monday, with the hit of the daily lower band two to three days after that.

Monday, 14 July 2014

Lower High Coming?

SPX retested the daily middle band on Friday and that held well. Now we get to the interesting part of the candle statistics that I was looking at on Friday morning, albeit with a sample size of only three similar candles over the last twenty three years. After the next day all three then moved to touch the daily upper band on SPY. One of those made a full touch and marginal higher high on SPX, and the other two touched the upper band on SPY but fell short of the touch on SPX while making lower highs. What was the really interesting part though, is that after each tested the daily upper band intraday, all three then fell hard to test the daily lower band on SPY within three days. It will be very interesting to see whether that is repeated here.

On the daily chart SPX retested the middle band and if we see a run at the upper band that is currently at 1986, just over the current all-time high. SPX daily chart:
SPX is looking strong in the premarket and it seems likely that it will gap over the 50 hour MA at the open. There is a possible double bottom target in the 1995 area if SPX can break over the current all-time high with some confidence. SPX 60min chart:
NDX has a similar double bottom setup with much stronger RSI support, and that has already broken up on Friday with a target in the 3950 area. NDX 60min chart:
CL and GC are both looking interesting on the long side, with a stronger setup on CL, which has strong positive RSI divergence at possible falling channel support. A small double-bottom may be forming and we could see a strong oversold bounce into the 103 area. CL 60min chart:
I'm leaning bullish on SPX today and looking for a retest of the highs, unless we see a serious fail at the 50 hour MA at the open. If my candle stat holds then there is obvious a serious chance that we see that test made intraday, and that is then followed by a sharp decline over the rest of the week. As I said though, that stat is based on a small sample group, so it may not deliver.

Friday, 11 July 2014

Some Candles Are Just Too Rare

That was a very rare daily candle yesterday, not visible on SPX, because for some reason the SPX data feed doesn't seem to notice gaps much for reasons I have tried and failed to establish in the past, but on SPY, which is what I use when I want a true picture of the daily candle. The candle for the day was a strong gap down through the daily middle band, with a recovery back above it, and I was only able to find three comparable candles going back to 1991.

In those three instances two traded intraday below the middle band the next day and both closed red for the day, with one closing significantly below the middle band. The other example rose modestly the next day. What was interesting though was what happened afterwards, which was that in all three instances SPX then rose to touch the upper band on SPY (a little short in two instances on SPX), and then immediately retraced back to the lower band. That was very interesting though a total sample size of three is very small and yesterday's gap under the middle band was the deepest of them all so even those three aren't necessarily fully comparable. .

SPX is making lower highs and lows at the moment and as long as that lasts, bears have the short term edge here. The bounce yesterday was a decent 50% fib retracement of the move down from the high, and yesterday's high may hold into another move down. I have a decent looking falling channel on the SPX 15min chart, and I'd be looking for a test of that channel resistance in the 1970 area this morning. SPX 15min chart:
Just above channel resistance is the key bull/bear level for me at the SPX 50 hour MA. That is at 1971 at the moment and if bulls want to turn this back up, then they need to take that back and hold above it, which is what they tried and failed to do on Wednesday. If they can break the last short term high at 1974 with any confidence then the next target should be another test of the daily upper band . SPX 60min chart:
The daily upper band is currently at 1987, and a test and fail there would obviously run a real risk of forming a double top targeting the 1920 area. If yesterday's candle is showing the way ahead here, then that is what that candle is suggesting. The daily middle band is at 1959 today and history suggests that we may well see that broken intraday today. SPX daily chart:
I've been wondering what was happening on the TNX chart the last few days and the expansion has resolved into a symmetrical triangle. The larger falling wedge is telling us that this triangle should ultimately break up, and in the short term the obvious next target is the 27 area. TNX 60min chart:
There is strong resistance in the 1970-5 range and bulls may well not be able to break through that today. If that is not broken then I'd be looking for at least a test of yesterday's low early next week. History suggests that a strong move up is unlikely today and that we may well see a break of the SPX daily middle band at 1959 intraday.

I'll be posting oil and gold charts later on twitter.

Thursday, 10 July 2014

Battle of the Bands

Just a short post today as I have to drive my daughter to an exam and will miss the first half of what promises to be a very interesting session.

I was a bit cagey on twitter last night about whether the low was in, as the bounce was looking a lot like a bear flag, and I said as long as bulls could hold 1971.5 SPX tomorrow morning we should be on the way back up. ES broke down hard overnight and clearly that isn't going to happen. This is good news. SPX has been butting up against the weekly upper band and needs some headroom for the next move up.

The key thing to watch today is the SPX daily middle band at 1959. If that breaks with any conviction today then my target would usually be the daily lower band or any major daily MA (50, 100, 200) higher than the lower band. As they are all currently below the lower band that would leave the daily lower band in the 1930 area as the target, and very possibly then a test of the 1926 low. The overall uptrend is not in any real trouble unless we see a break below rising wedge support from 1737, and that's now in the 1910 area. SPX daily chart:
You can see on the ES 60min chart that the retracement was a decent 61.8% fib retrace and I'm working a possible falling channel. If that holds then I'd be looking for the low today in the 1945-7 ES area, so low 1950s on SPX. You can see that the 60min RSI is extremely oversold. I'd be surprised to see much lower than that today. ES 60min chart:
I'll be back in for the second half of the session.

Wednesday, 9 July 2014

Testing the Daily Middle Band

Bears put a strong day together yesterday and broke down below the 50 hour MA. Shortly before the low I tweeted a confluence of strong support levels in the 1957-60 range, and the low was at 1959.46. The key support level here is the SPX daily middle band at 1957, and only a closing break below that would open up lower targets at the daily lower band in the 1930 area and the 50 DMA at 1921. The last two significant lows were at 1945 and 1926 and both of those are potential H&S necklines of course. SPX daily chart:
I've redrawn the resistance trendline on the rising wedge from 1737 as I think the revised trendline is better quality. That support is now in the 1948-50 area and if this wedge is really breaking upwards I'd be expecting that resistance should hold now. SPX 60min chart:
Does this decline so far this week weaken the overall bull case here? Not so far. I've mentioned quite a few times that the weekly upper band can only rise at 10-15 points per week, and that punches above it are both rare and significantly bearish. We should therefore expect a two-way market as we move towards upside targets, and while SPX remains between the daily middle and upper bands, there's not yet any reason to think that this is anything else. A daily closing break below the daily middle band at 1957 would open up deeper targets, but until we see that there's not yet much reason to be looking for a significant trend change here. SPX weekly chart:
CL / WTIC tested rising wedge support again at 103.01, and oil bulls really need to hold that level to avoid opening up further downside targets through to 97/8. A break below 103 would be a serious warning signal. WTIC daily chart:
It's a while since I have posted the EURUSD chart, and it is still bouncing gently. A small IHS has formed and if that breaks up the bounce may extend to the 138.5 area. The bigger picture remains bearish after this bounce. EURUSD daily chart:
I have declining resistance from the high in the 1970 SPX area, and that is an obvious target for the bounce from yesterday's lows. A break above 1970 SPX would suggest that the decline is over, but until then a retest of yesterday's lows is very much on the cards today. The odds don't favor a red close today as there have been only four instances this year when SPX closed down for three consecutive days, and only two instances since January.

Tuesday, 8 July 2014

Revised Upside Targets

Now that primary channel resistance has been broken. I've been considering the upside targets that are now in range as a result of that break. The first one is rising channel resistance from the 1814 low, and I have that currently in the 1995-2000 area. That looks like the obvious next candidate for a short term high area as I can't see any reason here to think that the current high might hold more than a couple of days.

Over the longer term there is obviously the issue that the rising wedge from 1737 appears so far to have broken up, though it's still just about possible that this action above it could be a wedge overthrow. The break of primary channel resistance suggests otherwise however. There are two obvious targets for this wedge breaking up. The first is the full technical target for the wedge, which is in the 2160 area, and that will be my primary target if my other target is taken out. The other target, as wedges often evolve into channels, is possible rising channel resistance from 1737, currently in the 2030 area, with a possible alternate option currently in the 2050 area. I am therefore assuming that the current overall uptrend should be good to at least 2030, though we might well see a strong retracement into the 1940-60 area from shorter term channel resistance in the 1995-2000 area.

SPX retraced a bit yesterday as expected, and we may see some more retracement today. If so I have very strong support in the 1966 area at the intersection of broken rising wedge resistance, rising support from 1926, and the 50 hour MA. That should be a solid floor, and a break below that would look significantly bearish. SPX 60min chart:
On the daily chart SPX closed seven points below the upper band yesterday. If we see a strong day today the daily upper band could close as high as the 1995-2000 area. SPX daily chart:
I have the weekly upper band now at 1993, and wouldn't expect that to close higher than 1996 this week. That puts 2000 in range this week and is a good fit with my resistance trendline in the 1995-2000 area. SPX weekly chart:
I mentioned a couple of weeks ago that if CL broke below 105 then I'd be looking for a hit of a target in the 103 area. That target was rising (wedge) support from the 91.24 low and that was tested at 103.19 at the low yesterday. The daily lower band on CL was hit at the same time so we may well see CL reverse back up here. If it breaks down from that trendline then the next big support trendline is in the 97/8 area. WTIC daily chart:
We may see some more downside this morning, but unless we see a break below 1966 I'm looking for new highs in the near future. I can't see any reason to think that the current high won't be broken soon and am looking for a test of my 1995-2000 target in the next few days. This looks like a dip to buy.

Monday, 7 July 2014

Broken Trendlines

Thursday was a strong day on SPX and NDX, and at the close, all three of the significant resistance trendlines that I was looking at in my Thursday morning post were broken. The most important of those was primary channel resistance from the October 2011, which had been tested and held in all four of the preceding weeks but has now finally been broken. I would expect another pattern to form and am considering the likely options, but at the least I'd be looking for a further move to the 2040 area now. SPX weekly chart:
Rising channel resistance from the 1926 SPX low also broke up. There's not much to suggest reversal on the 15min or 60min RSIs, and I now have my eye on rising megaphone resistance from 1814, currently in the 1995-2000 area. SPX 15min chart:
NDX broke up through rising channel resistance, and I'm looking there for a move to rising megaphone resistance in the 4025 area. NDX 60min chart:
The upper bollinger bands on SPX are a limitation here. On the daily chart less so, but SPX closed 4 points over the daily upper band on Thursday and we may see some weakness or consolidation today. Today is day four of the current ride up the SPX daily upper band. SPX daily chart:
The upper band is a very real limitation here on the SPX weekly chart. SPX also closed four points above the weekly upper band on Thursday, and unless we are to see a strong punch over the weekly upper band, which would generally be a strong topping signal, then SPX can only rise as fast as the weekly upper band can rise, which is about 10-15 points per week. If the band ride up the weekly upper band is to continue (currently starting week 7) then we are likely to see some more two way action. SPX weekly chart:
Leaning towards seeing some consolidation today or tomorrow. The stats for today are 62% bullish according to the Stock Trader's Almanac.

No room for non-equity charts today, so I'm planning to post TNX, oil and gold charts on twitter later on.