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Tuesday 12 July 2016

Grinding Higher

SPX pushed through the big resistance levels I was looking at yesterday at the open and has made a new high at 2153.62 so far today. If the bears have a shot today, and that's a real maybe, then the best scenario has the very well formed rising wedge on ES shown on the first chart below, having overthrown wedge resistance this morning, returning to test wedge support, currently in the 2118 area but rising rapidly of course.

As I haven't recently reposted here the bonus charts that I post for subscribers at theartofchart.net before the RTH open every morning I'm posting them all today. The usual ones are ES, NQ, TF, DX, CL, GC & ZB and I'm trialling NG as a possible addition. If you want to see these every morning you would need to subscribe to either the Daily Video Service or the Chart Chat Service at theartofchart.net. ES Sep 60min chart:
NQ Sep 60min chart:
TF Sep 60min chart:
DX Sep 60min chart:
CL Aug 60min chart:
GC Aug 60min chart:
ZB Sep 60min chart:
NG Sep 60min chart:
How high can this thrust up on SPX go? Quite a bit higher, though it really should see at least some retracement soon. As and when we see that and the support trendlines on ES and SPX get tested we should have final pattern confirmations. Until then we are looking at resistance trendline options, and if an SPX daily upper band ride gets going, SPX could be heading for the 2180-2200 area.

Would a hit of 2200 mark a glorious new push on SPX into heights far beyond? I'm very doubtful about that. The earnings and fundamentals don't support that move, there is no QE in the US to push it up anyway, and my very strong January barometer stat is calling 2016 as closing marginally green at best. You can see my post on the first day of February 2016 talking about that here. Could we see that stat fail this year? Yes, obviously, but the historical stats for last year were a lot stronger than those for this year and the stat delivered then. My working assumption is that it will deliver this year too.

That having been said I am not seeing any obvious setup for a serious high here yet. When the 2134 high was made last year I'd been talking about it for days, shorted the exact high (lucky entry) and announced in a post a couple of days later in a post titled 'The Road to 1820' that I was going to keep that short until 1820 was reached with the intention of taking over 300 handles on that short. You can see that post here. In the comments below you can see me saying that I was expecting to see that low latest spring 2016 and when the time came I cashed up in February at 1810 for slightly less than 300 handles once the three contract rolls on ES were taken into account. I haven't located the post where I mentioned that exit but it's in there somewhere.

The main thing is though that I haven't been calling anything similar here because I don't yet see anything similar here. I'm not expecting SPX to close 2016 heavily in the green but we could go a fair amount higher before we see the next strong move down. Best to be cautious on the short side until this move runs out of steam.

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