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Friday, 8 July 2016

Moment of Truth Time

Well I was doubtful about the bears holding it in yesterday but they did. None of SPX, RUT or NDX managed a bullish break and there are now very decent topping setups here on all three to deliver a solid retracement of the move up from last week's low, if resistance can hold again today.

Lately an expectation that the bears would show up to work sober two days running has been overoptimistic, and if this was a bull setup I'd be calling 80% odds that this setup would deliver, but this is the bears, and the NFP numbers may make the decision before the open, so I'm giving 60/40 odds in favor of the bears that this topping setup plays out, with the note that on a break up we would likely see SPX test the all time high at 2134 in the near future.

On SPX a 60min sell signal is now brewing and there is a very nice possible double top in place that on a sustained break below Wednesday's low at 2074 would have a target in the 2039 area, just above the 61.8% fib retracement target at 2036/7. Important daily closing support levels on the way are at the 5dma at 2097/8, the daily middle band at 2079/80, and the 50dma at 2077. Not far below the target is important support at the 200dma at 2025. The key levels close to double top support are the 50dma at 2077 and the 50 hour MA at 2078. On a break over yesterday's high at 2109.08 I'll be switching my lean to the bull scenario towards a retest of the all time high at 2134. SPX 60min chart:
On RUT a sustained break below 1131.71 would have alternate targets at either 1108 or 1102. More details about the overall scenarios on all three indices here are in the comments on the charts. RUT 60min chart:
On NDX a sustained break below 4380 would have a target very close to the 61.8% retracement of last week's move at 4290. NDX 60min chart:
Obviously the NFP numbers at 8.30am may set the direction for today and there is a higher than usual risk of a trend day in either direction. If the bear scenario plays out to target then I'll be looking for support there or at the 200dma on SPX at 1925. The bigger picture setup is still pointing upwards either now or later.

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