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Friday 31 July 2015

Will The Remaining Living Bear Please Stand Up?

Yesterday saw a sharp decline into an early morning low that was given back in a grind up for the rest of the day. The low was an almost perfect test of the daily middle band, and that may well be it for the retracement I was expecting. If not though then of course I was saying yesterday morning that more might be needed to be done on forming short term topping patterns, and I'd note that five of my six optic run charts now have nice looking possible double-top patterns, and the sixth is right at resistance and was turning down there at the close last night. SPX has now formed a very nice looking falling channel from the last two highs and if that survives into the open, then overall this is a potentially bearish setup for today. SPX 60min chart:
I've been looking for secondary patterns on my optic run charts established at the low yesterday and have a decentish rising channel on SPX that closed on the support trendline. There is now a larger decent quality rising wedge on INDU that also closed on the support trendline. No secondary pattern on TRAN yet but no real need for one either. All three charts have decent looking double top setups and anything below yesterday's close on SPX and INDU will be a support break. 3x 15min SPX INDU TRAN charts:
NDX is the only one of these six not showing an obvious double-top setup, but the secondary pattern there is a rising channel, and NDX closed the day close to channel resistance. Unless NDX gaps over channel resistance at the open, which looks possible, then NDX is leaning short here. RUT has formed a secondary rising wedge  and closed the day well above wedge support. NYA has formed a secondary rising channel (doubtful quality) and closed the day at rising support. Scan 3x 15min DX RUT NYA charts:
As the weekly candle fixes at the close today bulls want to break over the weekly middle band at the close to break back over it on the weekly closing basis.  That is currently at 2099.22 and bulls want a close at 2102.00 or higher for a clear break back above. SPX weekly chart:
The stats are bearish today and the pattern setup is unambiguously bearish. To change that bulls would like a gap up that doesn't fill, and if they manage that then I'd expect a strong day with a possible target in the 2126 area to entirely bullishly reverse last week's weekly candle, that entirely bearishly reversed the previous week's bullish breakout weekly candle. If we see SPX  over 2115 this morning that would be the obvious target area today in my view, though it would really be a strange thing to see. If that does happen however, it would be a solid confirmation of the new support trendlines on SPX, INDU and NYA, which would be useful later.

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