- 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.

Friday, 29 January 2016

Binary Setup on Cycle Trend Day

SPX has been compressing for a few days now and we are going to see a move very shortly. I'm leaning long for that move but it's possible both that any new high will be marginal, on the possible rising wedge option, or we may go straight down through support, on the double top option. Only if bulls can convert possible wedge resistance into support does the IHS target open up as a target, and even then there is significant resistance both at the daily middle band in the 1930 area, and possible channel resistance in the 1940 area. SPX 15min chart:
What the bulls have on their side is the very bullish daily signals setup, but this doesn't preclude a possible retest of the lows of course. SPX daily chart:
Today is a cycle trend day, which doesn't mean that we'll see a full trend day, but does give 70% odds that today will be dominated by either buyers or sellers. Today is the last day of January and the stats lean bullish. Even more so on Monday. We'll see if the bulls can run with that.

My January barometer setup requires a close under 1990 today to repeat last year's strong lean towards a flat year at best. No doubt the bears were up all night worried about losing that level today. Support is in the 1875 area and resistance is in the 1915-25 area. We'll see who wins the day, but it's seems almost certain that bears have already won the month, and therefore most likely also the year.

Thursday, 28 January 2016

Looking Down?

It's unfortunate that my post is late today. I was working late on theartofchart.net chart deliveries and overslept. I'll post the 15min charts that I did on SPX, NDX and RUT, and what I was wondering as I did these was whether the rally had just ended on SPX with that FOMC spike that failed. The key support areas I am watching today are the 50 hour MA at 1884 and the ES weekly pivot at 1868 (approx 1875 SPX). If bears can break these and convert them to resistance then we may well be on the way back to test the low at 1812 SPX. SPX 15min chart:
NDX 15min chart:
RUT 15min chart:
If we lose those 1884 & 1875 levels hard today then the rally may be over, though a retest of 1812 might well set up a double bottom for a larger rally into the ideal 2000 area rally target. If those levels hold today, be aware that that the next move up may just be a retest of the FOMC high before a retest of the lows.

Wednesday, 27 January 2016

Looking Up

SPX has survived the three days of the three day rule and there are multiple reasons to expect more upside here, including the daily RSI 5_NYMO buy signal and RSI 14 buy signal. Hard to call exactly where this is likely to top out but the three main areas for me are a retest of strong resistance in the 1940-50 area, then if broken I have an IHS target in the 1970 SPX area. If 1970 breaks hard then the highest target is the retest of the 100 week MA in the 2007 area.

While this rally lasts the key support levels to watch are closing support at the 5dma, currently in the 1890 area, and the 50 hour MA, currently at 1882. SPX daily 5dma chart:
The IHS targeting the 1970 area on SPX is on the chart below & looks pretty solid. I think the chances of making that target are good. Anything higher would be a bonus. SPX 15min chart:
This is very likely just a rally within an ongoing downtrend, but it's an interesting change of pace and will hopefully set up the next big short entry well. That is the most interesting trade I'm looking at here, and I'm hoping to catch that as close to 2000 as the bulls can manage.

Tuesday, 26 January 2016

Bold Numbers

Apologies for the very late post today. I had a morning appointment that overran badly, and it's slower work getting charts done after the markets open and I'm then trading as well as charting.

I mentioned on twitter last night after the close that the bulls narrowly managed to avoid a 5dma three day rule breakdown with a target at a retest of the lows. There was more downside overnight that reached my ideal target on ES at a retest of the 1850 area and ES then reversed back up hard there. There is a strange myth that globex highs and lows always need to be retested soon after. I've been watching that for a while and have seen little evidence to support this, and there's no need to see that here.

Stan called the 1850 target and that should be the B wave low on this ABC rally. Where is C going? Well that's where it gets interesting.

I'm posting the bonus charts that I have done this morning for subscribers at theartofchart.net, and the first thing to notice on the ES, NQ and TF charts is the very large mostly formed IHS patterns on them. These are now all fully formed and testing their pattern necklines. If they break up then that would make the obvious target for the C wave at a retest of the 100 week MA, currently at 2008 SPX. That is a very important resistance level in bear markets and was an obvious target area for any strong rally here. I would be very pleased to see that tested.

So below are the bonus charts for subscribers at theartofchart.net that I posted this morning. I do these every day and the standard set is ES, NQ, TF, DX, CL, GC & ZB. Of these ES, NQ, TF, CL, and ZB looked particularly interesting this morning & I mainly traded CL today, as the setup there was the nicest, and I managed to capture most of the move up from the open.

ES Mar 60min chart:
NQ Mar 60min chart:
TF Mar 60min chart:
DX Mar 60min chart:
CL Mar 60min chart:
GC Feb 60min chart:
ZB Mar 60min chart:
The bulls are looking rather beaten up at the moment and I have some doubts as to whether they can manage a 2000 test, but the setup is there and if seen, that should set up the next big short entry very nicely. I'm rooting for the IHS patterns, though I don't want January to close over 1990 as that would kill off the bearish (for 2016) January stat setup that I laid out a couple of weeks ago.

Monday, 25 January 2016

Looking For Some Retracement Here

SPX broke back over the 5dma on Friday with considerable conviction, so today and tomorrow are the other two days on the 5dma Three Day Rule, explained on the chart below. In essence though, if we should see a daily close significantly below the 5dma either today or tomorrow, currently at 1880, then a retest in the very near future of the low at 1812 would be very likely. I have found no exceptions to this rule since the start of 2007 on something like forty instances where there was a Three Day Rule breakdown.

I would add that there are now fixed RSI5_NYMO and RSI 14 buy signals on SPX so I am expecting more upside. That doesn't rule out a retest of the lows but if we see the initial retracement today that I'm leaning towards, I'll be looking for that to be forming a right shoulder on a large possible IHS that would target the 2000 area. SPX daily 5dma chart:
The setup on this SPX 15min chart that I did yesterday was almost perfectly ambiguous but the overnight action is leaning towards the retracement scenario on here. SPX 15min chart:
The overnight action that has me leaning towards retracement first here is that the rising wedges on ES (below) and NQ and TF as well, have all broken down, and these indices are forming short term topping patterns. The obvious fib retrace targets on ES are marked and detailed on the chart below, and if this move is forming the right shoulder on a large IHS the ideal right shoulder low on ES would be in the 1850 area. ES 60min chart:
If bulls can break over 1910 SPX with any force this morning then there will most likely be no retracement. If we do see the retracement it may well bottom out fast and then retrace quickly to close the day back above the 5dma.

Friday, 22 January 2016

Short Term Swing Low May be In

Stan and I have been doing educational webinars on Thursdays every couple of weeks or so for the last few months at theartofchart.net, and yesterday's was on the subject of trading in bear markets and trends presented by Stan and myself with guest panelist Mike Vacchi of Princeton Trader. If you missed that because the room ran out of seats, or just would like to see the recording, that recording is posted here.

As an aside, Mike Vacchi runs the Princeton Trader trading room, which focuses on trading ES and NQ intraday. Stan and I are both on the trading team there. If you have been having trouble trading futures successfully this month, and have the self-discipline to follow simple directions (surprisingly often not the case) then I'd mention that Mike gives two week free trials and that that you can sign up for these here. So far in January on the room trades there has been one red day (last Thursday) with a loss of one handle, and the best day was yesterday which was up 38 handles. Room trades are up a total 200 handles on the month as of yesterday's close.

One of the things we were looking at was the importance of the 100 week MA in confirming bear markets and I ran the stats on that this morning for the lifetime of SPX. The SPX retest stats are as follows:

1930 - Retest and fail to new lows
1938/9 - Test as resistance for a year then break up
1940 - Retest and fail to new lows
1947 - Retest and fail to new lows
1953 - Retest and fail to new lows
1957 - Broke up to lower high, made lower low, then uptrend resumed
1960 - Broke above for 4 weeks, then lower lows, then uptrend resumed
1962 - Broke up and resumed uptrend
1966 - Retest and fail into new lows
1969 - Retest and fail into new lows
1973 - Retest and fail into new lows
1978 - Broke up to lower high, made higher low, then uptrend resumed
1981 - Retest and fail to new lows
1987/8 - Test as resistance for a year then break up
1990 - Fail to higher low then uptrend resumed
2000/1 - Retest and fail to new lows
2008 - Retest and fail to new lows
2011 - Retest and fail to new lows
2015 - Broke up into lower high then lower lows

Do we need to see a retest of the 100 week MA before more downside? No, as the current situation is like 1957, when SPX broke back up into a lower high last year and then broke down again this month. It is main resistance here though while we are in this bear trend / market, and if we see a break back above it, currently at 2007, then that would strengthen the case that a significant low has just been made, though I think it is unlikely that any really significant low leading to sustained new all time highs can be made without at least a test of rising support from the 2009 low, currently in the 1750-60 area.

Yesterday SPX rallied to my 1890 trendline target, failed there from a rising wedge formed from Wednesday's low (posted on twitter as the move was peaking), and then retraced 38.2% of that wedge. I posted on twitter as that reversed back up that this was potentially the start of a new bull move up and that that is what we have seen. Where will that move end is the question for today.

I posted the volume spikes on the daily SPX chart yesterday morning showing why at least a short term low might be forming or already have been made. That is looking pretty good on the action so far this morning. For today there are two obvious IHS options and at the time of writing SPX may well be going with option 1, with an IHS target fixing in the 1970 SPX area. If SPX sees sustained trade over 1900 this morning I'll be expecting that to play out, with a possible fail area in the 1950 area where I have a potential larger IHS neckline. On a sustained break back below 1850 from here we could see a retest of Wednesday's low at 1812 and possible continuation lower. SPX 15min chart:
Today is a cycle trend day, which means that there are 70% odds that either buyers or sellers will dominate the day. That doesn't have to be a full trend day, but often will be. On this pattern setup, if bulls can sustain trade over 1900, then we may well see a trend up day. Trade carefully today and everyone have a great weekend. :-)

Thursday, 21 January 2016

Volume Thrusts As An Indicator

If you look at the bottom of the daily chart below you can see that I have added some annotations and shading to highlight where there are spikes in the daily volume well over the average. I mark these up because these volume spikes occur at, or very close to, reversal areas, and the last two days have generated these spikes. I've looked at these in 2008/9 and the main differences in a bear market/crash situation were that the average volume was higher, and it often took more volume spikes to turn in very strong moves. Volume spikes like this will generally deliver a swing low within two or three days. That might just deliver a rally, but to just keep running lower would be a rarity. That is the overall context today. SPX daily chart:
Shorter term the falling wedge on SPX has clearly evolved into a falling megaphone. The obvious next target within that megaphone is megaphone resistance in the 1890 area, with a lot of other resistance around it such as the 5dma, the 50 hour MA etc. A break above this resistance should signal that at the least a swing low is forming, though as ever the low could still be retested. If we see a retest of yesterday's low directly from here then that would likely deliver a marginal new low setting up a very possible double bottom. SPX 60min chart:
I'm leaning towards that 1890 test area initially today, with a probable fail there as Stan & I don't think the swing low is in yet. We may be wrong though & if SPX recovers back over 1900 with any force then most likely we are. If that resistance holds I'd expect at least a retest of the lows from there.

Wednesday, 20 January 2016

The Trend Is Strong In This One

Apologies for the late post today but there has been an international conspiracy today to keep me away from my charts that has so far involved Stan, my daughter, and my (wife's) dog. I hoping this won't be a regular thing.

So far today the ES low is at 1804.25. This is over 100 handles below the globex high yesterday morning so it has been quite a move. Is it over? Possibly, though we need more evidence before buying here with any confidence. What I will say though is that the high yesterday was at NQ falling wedge resistance, and the low today is at NQ falling wedge support. We'll see if that holds.

On the SPX 60min chart falling wedge support has been broken into the lows. This means one of three things. The first is that we are looking at a bullish underthrow of the SPX falling wedge, and that the long awaited but so far elusive strong rally is starting here. The second option is that the falling wedge is expanding into a falling channel or megaphone, which would be the fairly bearish option. The third and most bearish option is that the wedge is breaking down with a target in the 1580 area, which is in the main 1550-1600 target area for 2016.  That's a possible. We'll see. SPX 60min chart:
So what are we looking at on the bigger picture weekly chart here? Well at the moment we are watching SPX break major double top support at 1867. That pattern has a target at 1600 and I'm expecting to see that hit this year, possibly as soon as a major cycle low window due in March/April.

Shorter term I had a full wedge retrace target at 1820. I mentioned this on twitter shortly after the open and that has obviously now been hit.  I have possible falling trendline support in the 1800 area, and below that I have rising channel support from the 2009 high as a major target in the 1750-60 area. Below that I have very strong support at the retest of the 2000 and 2007 highs in the 1550-1600 (roughly) area. That retest zone is the main target area for this move IMO and has been for a while now. On the bigger picture this would retest broken resistance on a larger pattern looking for 2440 on the next move up. I looked at that pattern in a post in June 2013 that you can see here. SPX weekly chart:
Back in May last year I wrote a post entitled 'On the Road to 1820' and said that I had shorted almost the exact high at 2132 ES, and would hold that short for over 300 handles of decline until 1820 was retested (the full retrace of the wedge target that was hit today). You can see that post here. That wasn't an easy short to hold, and I had to roll it over three times, but I cashed it today at 1812 ES for a bit under 300 handles profit once the roll is taken into account. Tops generally take longer than expected to form and this one certainly did that. I'm hoping to repeat the trick if we see a strong rally from somewhere down here and take another 300 handles into the 1600 SPX double top target. We'll see if I get the chance.

The trade wasn't big, and the entry almost exactly at the high was lucky, so I won't be buying myself a private island with the proceeds or anything. The point of this trade was mainly just to challenge all the analysts who thought that the market could no longer go down, and to demonstrate that markets move up and down in cycles that are predictable to a significant degree.  That is what Stan and I do at theartofchart.net, and if you want to see more examples I'd suggest watching Stan's review of our 'Twelve Trades of Xmas' trades that were posted on our subscriber only twitter feed on 23rd December. We started doing this for our Chat Chat viewers before we launched theartofchart.net. We'll be doing these every Xmas but this one may be tough to beat next Xmas. You can see Stan's review here. If you end the (short) video thinking that our subscription prices are unbelievably good value, then I'd be inclined to agree. :-)

Tuesday, 19 January 2016

Signs of Life

There's been a very decent rally yesterday, and the obvious target on the SPX 15min chart is a hit of wedge resistance in the 1910-5 this morning. I prepared the chart below on Sunday for theartofchart.net chart service subscribers so you can see that so far at least, this rally is pretty much as expected. SPX 15min chart:
What's more interesting is that the falling wedge on ES has broken up overnight. If we see the same happen on SPX, and possibly if we don't, this should mean that ES/SPX are in a bottoming process. We'll see. ES 60min chart:
On the SPX chart there is a fixed RSI 15 buy signal, and both a weak RSI 14 buy signal and a NYMO buy signal are brewing. If the bulls can put in a strong day into the close then that might deliver a strong RSI 5_NYMO buy signal. These are definitely less reliable in strong downtrends though. One of these fixed the day before the 140 handle last leg down into the October 2014 low, so I'd suggest not mortgaging the farm to go long if it fixes. SPX daily chart: 
Today is a cycle trend day, which means of course that we could see a trend day, but regardless of that there are 70% odds that the market will be dominated by either buyers or sellers. It's becoming harder to see the dominant side being the bulls with this strong decline from the open but we'll see. There is possible strong support at Friday's low at 1857, and wedge support at 1910-5 is an open target above.

Friday, 15 January 2016

Retesting the 1879 Low

Well the 1879 SPX target really delivered hard yesterday with a impressive 56 handle rally off 1878.93 yesterday. I did mention on twitter though that in the absence of an obvious reversal pattern that there was a significant risk that the low might well be retested, and that there was no obvious reversal pattern. It seems very likely that the 1879 is going to be retested this morning. If that low holds then that sets up a possible double bottom with a target in the 1990 area on a break back over yesterday's high. If that low breaks hard then Stan's next level is in the 1852 area, and a really hard break below 1879 opens up a possible retest of the October low at 1820. This is angry tape and needs to be traded with caution and respect. SPX 60min chart:
I've mentioned a few times now that is the main chart to watch here is RUT, and RUT is a large part of why I am looking for a big rally from this area. RUT is testing double pattern support and the 1000 level here and that is very serious support. I would be surprised and frankly very concerned to see that break today. It should hold. RUT daily chart:
This is also where ES should hold the line as well. This is the ES bonus chart I posted for theartofchart.net subscribers this morning. You can see that wedge resistance held the high yesterday afternoon and that wedge support has been tested this morning. The higher probability trade here is long, though as ever it could still go the other way. ES Mar 60min chart:
This is wild tape, and it's very easy to get run over in these huge moves. If you aren't an experienced trader then it might well be better just to watch and learn. This angry tape demands to be treated with respect, and will happily turn traders into roadkill in the absence of that respect. Many trader accounts have imploded since the start of January and there is no need to be a hero and risk joining them.

Stan and I are doing a free to all educational webinar on Thursday 21st January on trading bear trends and if you want to attend you can find the link to sign up for that here. We do similar free to all webinars every two weeks or so on a range of topics.

I'm having screencast issues this morning. The expanded versions of the charts will be available ASAP.

Thursday, 14 January 2016

Just A Little Further

I was saying on my post yesterday that the bear flag setup strongly favored at least a retest of the lows and we most certainly got that. On a sustained break below the lows yesterday the full bear flag target is under 1800, but Stan and I are not expecting this break to be sustained. The other cycle trend day this week is tomorrow, and our lean is to see a strong rally then. Today or possibly tomorrow morning we should see a new low below yesterday's low our ideal number is in the 1879 SPX area, which Stan has been looking at in our theartofchart.net subscriber daily video updates for the last few days. SPX might go a bit lower than that but a decent rally should be close now.

In the short term the falling wedge has now evolved into a falling channel and SPX is on a 60min buy signal that I'm expecting to see play out, most likely after marginal new lows are made.  SPX 60min chart:
On the RUT daily chart I'm working a possible overall falling megaphone from the highs, and that support trendline is just a little lower. RUT daily chart:
Is it possible equities break down hard directly from here? Yes, but the odds favor a rally before very likely new lows. I'll be doing a post at theartofchart.net on the big topping patterns and targets on SPX, NDX and RUT either today or tomorrow.

Stan and I will be doing a free to all educational webinar on trading in bear markets on Thursday 21st January and I'll be posting a link to that here tomorrow. I think the odds of seeing 1600 SPX tested this year are good so if you're interested in strategies to trade that test I'd suggest attending.

Natural modesty aside, Stan and I have really been knocking it out of the park over the last few weeks and any of you who are struggling with these markets should consider subscribing to our (evening) daily video service. I also do bonus futures charts for ES, NQ, TF, DX, CL, GC and ZB every day for subscribers, and as I'm changing the password tomorrow, I'm publishing the access password for that today so any of you can check that page out. My bonus charts can be seen here, and the password is room101.

Looking for a more consolidation type day today. We may well see an AM high that fails though, and we are looking for that ideal 1879 SPX target to likely be tested today or tomorrow morning.

Wednesday, 13 January 2016

Breaking Up Seems Hard To Do

Yesterday started with a perfect hard rejection at my wedge resistance at 1947, but after a 33 handle decline SPX reversed back up and broke wedge resistance. At this stage I'm looking for a reversal pattern of course, and in the absence of the retest of the lows that didn't happen yesterday, it is still very much a possibility that the lows will still need to be retested to make the second low of a double bottom.

The pattern setup from the low isn't that clear, but so far it looks a lot like a rising wedge that would be a likely bear flag on the bigger picture, On a break below wedge support, at 1922.5 at the time of writing, the bear flag target would be either a retest of the low or the full flag target would be in the 1790-1800 area. I'd be leaning strongly towards a retest of the low or a marginal new low. SPX 60min chart:
The setup on ES is another possible bear flag forming or double bottom. ES 60min chart:
I was thinking yesterday that a retest of the low was likely before a big rally can get started. I'm still thinking that.

Tuesday, 12 January 2016

The High Before The Low

I have promised my wife that I will fight against my strong natural english tendency to understatement this year, and will at least mention particularly sweet calls that I make when they make target. This is therefore a good time to look back at my first post after Xmas on Monday 28th December where I gave 70% odds that RUT was about to decline 10% into the 1030 area. RUT tagged 1031 yesterday, slightly less than ten trading days after that post, and I'm considering that target made, though I'm not expecting that low to hold long. You can see that post here.

Also worth a mention is my call in the same post that the odds were 50% that SPX would close the year red for the first time ever in a year ending in a 5. Obviously that delivered too, though I'd note that the stat I'd read that SPX had not closed red in a year ending in a 5 since 1875 would have been more impressive if SPX hadn't been launched 48 years later in 1923. Nonetheless that was still an unbroken string of nine examples that has now been broken. Not the only big stat that was run over last year of course :-)

Moving on to today, I posted an earlier version of the chart below on twitter yesterday before the falling wedge from 2022 broke up, and gave the ideal fib target range as 1947, 1961 and 1975. SPX 5min chart:
I'd note that the resistance trendline on the larger degree falling wedge from 2062 closed in the 1947 area yesterday and that if we are to see a reversal into new lows then that trendline is the obvious target, and would most likely be hit this morning. SPX 60min chart:
Where are we within this leg of the downtrend? Well I think this is likely to be the last significant rally before the wave low is put in. If we are to see significant new lows then that wedge resistance in the 1947 area at the close yesterday should ideally be tested and hold this morning. A break above would suggest that any subsequent new low would likely be marginal and the second low of a double bottom into the larger rally that Stan and I are looking for shortly.

Monday, 11 January 2016

Big Rally Coming Soonish

Stan and I are expecting a big rally soon, and there is a possible setup for that to be starting here, though unless we strong evidence to the contrary we are looking for another lower low first. This falling wedge on the SPX 15min chart is looking bullish, and I have a similar pattern on ES, with NQ and TF also having tested trendline support at the globex lows. SPX 15min chart:
In terms of open targets SPX made the both of the alternate double top targets at 1936 and 1924 on Friday, and RUT has also made the pattern targets, though there is still a compelling target area below in the 1025-30 area. NDX is the exception, with an open target below in the 4225 area. NDX daily chart:
It's looking like a more two sided day so far today. I would like to see a decent rally today into at least the 1940-5 SPX area if the bulls can manage it before the next leg down. It's possible though that the high today was made just after the open.

Friday, 8 January 2016

In With The New

I'm reorganizing my mornings at the moment to accommodate my increased morning chartload with the futures charts I am doing for theartofchart.net subscribers. There are a lot more charts for me to do now in the mornings, and a subscriber twitter feed to manage intraday, but I should soon be at the stage where I can get the ES, NQ, TF, DX, CL, GC and ZB futures charts posted for subscribers in the hours leading up to a deadline 30 minutes before the open, and then follow up with my free post here ideally before the RTH open, or within the hour afterwards if that's not possible. I'm still working on that but expecting to have shaken down my new morning routine within a couple of weeks. Working on it.

Stan and I are also shaking down the new private twitter feed, mainly intraday ES at the moment but I'm looking at adding intraday signals on CL soon & possibly more later. Yesterday was a very nice day on the feed, with Stan using a short trade 1967 into 1930 in the afternoon as a training exercise, and for those who stayed after the close we did the same on another trade from 1933 up to 1960 from there, though irritatingly ES stalled three ticks short of my ideal 1961 double bottom target at that high. There are no trade recommends on any of our services but we share our signals, setups and are doing a lot of training on how to trade while minimizing risk.

We were thinking that my bonus futures charts and the private twitter feed would be bonus features for our triple play and annual subscribers, but it's becoming obvious that they are natural additions to our daily video update service, as Stan does a daily video update on these instruments  and selected others every night. That's making the $99 per month we are charging for the daily video service look rather too cheap so I suspect the price for that will be rising soon. That won't affect any existing subscribers or those who subscribe before the price rise as we give a price guarantee for all subscriptions that the price will never rise as long as the subscription is maintained continuously, so if you're thinking of trying this, I'd suggest trying it out before the price goes up. At $99 per month, two handles profit on a single ES contract in a month would cover the cost. Personally I spend more than that every month on my morning coffees. If you're interested you can sign up for that on this page here and that is the daily video service.

These are all of the futures charts I posted this morning. On equities there is a possible short term low forming, and we should be close to a strong rally here. In the absence of a trendline break we are looking for a bit lower but we may not see that. I would also draw your attention to the CL chart, where there is a possible major low forming. ES Mar 60min chart:
NQ Mar 60min chart:
TF Mar 60min chart:
DX Mar 60min chart:
CL Feb 60min chart:
GC Feb 60min chart:
ZB Mar 60min chart:
I have open targets below on all indices and I'm expecting those to be hit, though not necessarily before a strong rally. As I haven't managed to do it today I'll be doing a weekend post on the open targets below on SPX, NDX and RUT. I mentioned the open alternate targets on SPX yesterday morning, and they are 1936 or 1924. SPX came close to testing the 1936 target yesterday and that may well be hit today. Everyone have a great weekend. :-)

Thursday, 7 January 2016

Groundhog Day - Suspended Sentence 2016

A year ago, on the fourth trading day of January 2015 I wrote a post called Suspended Sentence. You can see that post here. In that post I was talking about SPX having lost over 2% in the first three days of January, something that was fairly rare, having only happened eight times in the previous 44 years. Having run the numbers I had determined that if January then closed above the closing print on that third day at 2002.61, then the best case for SPX historically was a flat year. SPX closed under that low and we had a flat year that closed slightly in the red. 

Fast forward a year and this setup is now slightly less rare, having now happened nine times in the last 45 years. The close yesterday was at 1990.26 and if SPX closes under that number at the end of January, then of the six that did that previously the best full year performances were 1% and 3% gains, and the remainder were marginally red last year, then down 10% and 11% on the year, and then an impressive 39% down on the year in 2008. I am expecting, and the odds favor two to one that, January will close out under that 1990.26 so we shall see. 

In the event that SPX can beat that number at the end of January, the three previous examples that managed that all managed excellent years, with the lowest rising 14.75% and the other two rising slightly over 26%. That would be the SPX 'get out of jail free' option and historically that has odds of one in three, though given the overall setup here I'd trim that down to a still overgenerous looking 20%. 

When this stat fixed last year I had numerous comments that the other historical stats for 2015 were all bullish. That didn't save 2015 from going red, and I'd note that the historical stats for presidential election years are mixed at best, with five of the last eight presidential election years closing in the red. On the stats and the overall setup here this is rather unlikely to be a banner year for dip buyers, though next year may well be an entirely different story of course. 

Back to the charts where the very nice rally setup at the close yesterday was torpedoed by more bad news from China. This has very much been a heavy news week, and that may well continue through January. I'm going to use my ES chart first. I post these every morning before the open for theartofchart.net subscribers and that shows the bullish falling wedge at the close yesterday broke down into a perfect falling channel on the China news last night. That falling channel resistance is now in the 1984 ES area and that is the next obvious target from here. ES Mar 60min chart:
On SPX I mentioned yesterday morning that given the setups on RUT and NDX I was doubtful about my SPX falling channel support holding. SPX gapped through it with a vengeance this morning at that means that there are now fixed alternate double top target at 1936 or 1924 SPX. Neither of those targets has been hit yet of course and until they are then they are unfinished business below. SPX 60min chart:
I've been meaning to post the recording of last week's free to all Chart Chat at theartofchart.net, and you can see that posted here. Even by our usual high standards this was a particularly good Chart Chat. We were looking at many indices, forex pairs, commodities, energies and bonds, made some bold calls, and pretty much everything made our targets over the next three days. Well worth a watch IMO. We are expecting a strong rally soon but I'd normally expect to at minimum see that 1936 SPX target made first. 

Wednesday, 6 January 2016

Through the NK Looking Glass

Apologies for the late post today. I'm not feeling 100%. Still trying trying to shake an Xmas cold.

Another news break down on more bad news from China and I understand from twitter that North Korea are testing a hydrogen bong. Seems a bit high tech for NK but maybe that might mellow them out a bit so we'll see. If they get the munchies then the lack of food there could become an even more serious issue of course. :-)

New lows at the open this morning and bulls and bears have been fighting it out all morning so far. Currently bulls have been making the running but failed to sustain a break up. The key area I am watching is falling channel resistance on RUT and bulls have come close to testing that, but no cigar so far. RUT 15min chart:
No clear pattern on SPX but we do have a declining resistance trendline to watch now. If bears can take out the current AM low then my falling channel support is in the 1975 area. SPX 15min chart:
I have a strong dissonance between RUT and NDX here on one hand, and SPX on the other. Continuation down here on RUT targets the 1030 test that I looked at in detail on Monday 28th Dec. NDX below is breaking down from a perfectly formed double top with a target in the 4225 area if NDX can sustain this break. These targets are not a match with my trendline support on SPX, which is more likely to fail to hold as support now. NDX 60min chart:
There are a lot of possible 60min buy signals here, but that doesn't mean that they'll ever fix. There are also some serious downside targets on some very nicely formed patterns saying that if we aren't making a short term low here, then this current decline could well smash my SPX support and make a serious downside move. This is an inflection point and whoever wins the day today, still very much in the air at the moment, will likely define the next few days.

Tuesday, 5 January 2016

A Decent Start

Yesterday made a lot of progress towards my channel support target in the 1975 SPX area, but it would be rare to see a move straight there unless that support was going to break. The move up from the low yesterday looks like a B wave bounce and the obvious targets are the 38.2% fib retrace in the 2025 area and the 50% fib retrace in the 2035 area. I wouldn't expect much higher as I'm expecting to see the open breakaway gap into 2043.94 respected on this move. SPX 60min chart:
On ES this looks like an ABC with C in progress forming what should be a bear flag. The first target on a break down from this flag would be a retest of yesterday's low, The full flag target on a break below the first target would currently be in the 1920 area, but I don't think the rally has topped out, and that target is calculated on the rally high level. If we were to see a rally high in the 2027 ES area, then the full flag target would be in the 1932 area, still somewhat low for my channel support test at the moment. For the flag target to be at my channel support this rally would need to top out in the 2060 area, which is a lot higher than I am expecting, so we'll see. ES 60min chart:
Looking for an AM low today above the ES globex low at 1992, and then another rally leg up with likely fail area if reached in the 2025-9 range. The rally high will set the main declining resistance trendline for this move and may give me the decline pattern, which I'll post on twitter once I think the rally high is made. My twitter handle is shjackcharts for any of you not already following me there.