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Friday 15 April 2016

A Storm of Sell Signals

I mentioned yesterday morning that there were a lot of strong sell signals fixed on various equity instruments and timeframes, and quite a few more fixed yesterday. At the close yesterday the roll call of fixed sell signals on SPX, NDX and RUT were as follows:

  • SPX - daily RSI 5_NYMO, 60min RSI 5, 15min RSI 14
  • NDX - daily RSI 14 and RSI 5, 60min RSI 14 and RSI 5, 15min RSI 14
  • RUT - daily RSI 14 and RSI 5, 60min RSI 14 and RSI 5, 15min RSI 14
More are brewing, notably the SPX daily RSI 14, and some weekly sell signals depending on the close today. On the futures charts I only really watch the 60min RSI 14 signals, and ES and NQ were fixed before the close yesterday, with a TF 60min sell signal that then fixed overnight. 

I can't recall ever seeing this much RSI divergence at any market inflection point before, though I've only been watching really closely for a few years and no doubt it has happened before at some point. Does this storm of RSI sell signals mean that equities MUST turn here? Obviously not, as there are no certainties in market direction, ever, but it does mean that the 80/20 odds that I was giving yesterday in favor of a bearish resolution here may well be giving the bulls too much credit. We'll see. 

Apologies for the late post today, and obviously I'm running very late so I'm going to use the bonus charts that I posted this morning for subscribers at theartofchart.net. I like to do this every so often just to give regular updates on the forex, energy, precious metals & bonds that I do at theartofchart.net nowadays, and obviously to make readers aware that if they should want to see these from me every morning, then all they need to do is subscribe to the Daily Video Update Service there. We're redoing the website at the moment, and after we've finished doing that we are planning to increase the price of this service, but as long as the subscription is continuous no price rise will ever be applied to existing subscribers, so if you are thinking of subscribing I'd suggest doing it sooner rather than later. 

See if you can guess my first trade today from the charts below:-)

ES Jun 60min chart:
NQ Jun 60min chart:
TF Jun 60min chart:
DX Jun 60min chart:
CL May 60min chart:
GC Apr 60min chart:
ZB Jun 60min chart:
In terms of the major resistance trendlines that are the obvious targets for this move on RUT and SPX, RUT hit the ideal target at the high yesterday but SPX was three to five points short. Does that matter? Yes it does. As long as that target is not hit it is unfinished business above, and that could have a big impact on what happens after any reversal here, though I think it looks very possible that we'll see some retracement today and then a slightly higher high on SPX early next week (but probably not on RUT) to reach that target. I posted a chart of the full setup on twitter yesterday afternoon and I'd suggest looking at that chart, which you can find in my twitter feed here.

Today is a cycle trend day so that would usually have 70% odds of being a directional day dominated by either the bulls or the bears. I'm wondering whether opex today skews those odds though. We'll see.

Did you guess long ZB from the charts? If so then that's absolutely right. The double bottom has now broken up and is now retesting broken double bottom resistance. Nice setup. Everyone have a great weekend. :-)

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