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Wednesday 22 June 2016

Three Day Rule - Day Three

I've been watching the coverage of this month's potentially market moving crisis du jour which is the Brexit campaign. How long will this remain 'important' even if the Brexit camp wins? That's hard to say. Anyone remember Ukraine? The campaign has been funny in places though, I thought the concern that Britain's growth prospects might be damaged long term by leaving the slowest growing region in the world was particularly witty, though that may not have been intentionally the case.

How does that impact trading this week? Well I think the Remain camp will most likely win the vote. The status quo always has a big advantage in this kind of poll and fear of the unknown is a potent message, even if uninspiring and suggestive that there is no positive message to sell instead. As you can see from the video below (thanks to @busculture on twitter for sending me this), the Remain message hasn't really changed since the last Brexit referendum in 1975. They won then, and they'll likely win now. That should favor the bulls at least initially. Crisis du Jour:
SPX is on day three of the 5dma Three Day Rule. That means that if SPX closes significantly (2 handles plus) below the 5dma today then we would be highly likely to see a retest of the 2050 low before a retest of the 2120 high. The 5dma opened in the 2082 area this morning. On the upside we had a rather confused looking bull flag with a target back at a retest of Monday's high and that is making target at the moment. What bulls really need to deliver is a daily closing break over the daily middle band, which opened today at 2094. If seen they then also need to avoid a reversal candle tomorrow that rejects that break. SPX daily 5dma chart:
There's not much around in the way of directional targets or patterns here but I do have a possible IHS forming on both NQ and NDX that would target a retest of the last high on a break up. That hasn't broken up yet but a sustained break over the 4437 area neckline would look impressively bullish. If that pattern is going to break up, I would expect that break today, so we'll see. NQ Sep 60min chart:
So far this has been a good week to go fishing, but the tape has been compressing here, and we are likely to see a break up or down soon. In the bull corner there are still open 60min RSI 14 buy signals on SPX, NDX and RUT, and the UK will likely vote to remain on the EUs ship of gently rotting zombie economies, which is good news, kinda. On the bear side there are still open daily RSI 14 sell signals on SPX and RUT, the daily middle band has been tested on both on Monday and Tuesday and held both times, with NDX not even getting as far as that test, and SPX has been testing broken main rising channel support so far this week, which is decent resistance that has held so far. May the least apathetic side win!

In other news I'm sure that some of you are aware that theartofchart.net has been hacked repeatedly since Sunday, though that seems to have stopped for the moment and the security hole at Wordpress may have been fixed now. We are trying to trace the hacker and I would like to appeal for help in this search to add to the information that we have managed to glean so far. All we have so far is a profile that tells us that we are likely looking at a white male between the age of 12 and 40, with a tiny penis that has not been detectable since the hacker's weight rose over 350 pounds, and living in his mother's basement. If anyone reading this has any information that would help us work up this information into a specific name then please come forward. We have been assured of a claim on the hacker's assets, which we are offering as a reward, so there could be three broken keyboards, a half eaten pizza, and an old stool sample in it for anyone who can help us to track down this dangerous menace to society. :-)

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