- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Friday, 9 October 2015

Funny Looking Triangles

The significant retracement that I was looking for yesterday never happened, as a triangle formed and then broke up, annoyingly after SPX and RUT both first broke rising channel support. The channel support that held was on NDX, and there is now a perfect rally channel there that I'm going to be using as my marker to show as and when this rally ends.

You probably won't see a triangle on the charts easily but that's because it was just an EW triangle. These often look like classical triangles but equally often don't. This one below on NDX looks like a classical rectangle, but if you look at the RSI 14 then you see the underlying triangle there, which is generally the case. NDX has started a thrust out of the triangle and if sustained then the thrust should form a pattern, and then break down into a full retracement of the thrust. All of the sell signals from yesterday morning are still in place so as and when this thrust fails it will most likely fail hard. NDX 15min chart:
What are the upside targets here. Well on SPX there is obvious resistance at the FOMC high and we saw that tested at the open. If SPX goes higher then my preferred target here would be in the 2025 area, as the setup I'm showing on the weekly chart below tends to either become a bear flag or a double bottom. If it is forming a bear flag channel then the target is the 2025 area. A bear megaphone could go higher, with strong resistance from 2025 through 2045, and very strong closing resistance at the weekly middle band at 2041. On a break over 2045 the double bottom option would become the more likely option, and I'd be looking for a retest of the all time high. The triangle thrust here should still retrace, but at that stage it would be a long entry. SPX weekly chart:
Yesterday was a cycle trend day, which I was saying in the morning had 70% odds of being dominated by either buyers or sellers. I was looking for sellers but we got buyers instead. Today is also a cycle trend day, with the same odds. If bears want control today then they really need an AM high that fails. If we don't see that then bulls may push this up all day. If we see SPX break back below 2009 then then the rally high may well be in, and I'd be looking for a rejection move.

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