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Tuesday, 15 September 2015

Significant Inflection Point Here

Just for a change of pace today I'm going to do my SPX post without any SPX charts, as I think I can get the point across better with Dow and ES charts today.

Just to clear up one issue I'm getting every morning before I start, I'll just say that I am still expecting a retest of 1911 before a break over 1988 on the basis of my 5DMA Three Day Rule. Could this be the first failure since the start of 2007 on that stat from dozens of examples? Yes, in the sense that every instance has a possibility of failure, but I'm not seeing any strong reason to expect failure in this instance as yet.

The best formed triangle from the panic low is on Dow, so I'll lead with that today. The Dow triangle was breaking down slightly at the close yesterday, but that's not unusual in a triangle and may not be significant. If Dow breaks down hard today then the triangle target will be in effect at a retest of the panic low. If Down breaks up through the (red dotted) declining resistance trendline from the pre-panic rally high, then I'd be looking for a likely test of triangle resistance. That trendline has pinocchioed slightly at the open this morning. INDU 60min chart:
On ES (SPX futures, add ten handles at the moment for rough SPX equivalent level), a smaller triangle has formed within the larger triangle and should break up or down today. A sustained break up through triangle resistance, currently at 1954 and the weekly pivot at 1951.2 should deliver a retest of the last highs in the 1980 area, and the retest of the last high at 1988 on SPX. A sustained break below triangle support at 1936 should deliver a retest of the last low at 1899, and the retest of the last low at 1911 on SPX. I need hardly say that I'm leaning towards seeing the retest of 1911 SPX next but this could go the the other way. My stat doesn't exclude a test of 1988, it excludes a break over that level. Anywhere up to that level is ok. ES 60min chart:
I'm expecting to see a break out of this inflection point level today, and am leaning 75%/25% towards that break being downwards. If this breaks up I'd be looking for likely failure at the retest of the last high at 1988 SPX.

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