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Friday 10 March 2017

Classic Cliffhangers

I've been re-reading some bestselling tomes from my economics library and was very struck reading the foreword of one at how the same concerns tend to come up again and again. The writer was talking about how world trade was reaching a point of exhaustion, how foreign competition was hollowing out western economies, and how the cycle of boom and bust has reached a point where it seems to have stabilised into a flatline of permanent and chronic depression, that seems likely to extend indefinitely into the future until drastic economic changes are made. Worrying stuff from Friedrich Engels, who was way ahead of most commentators saying the same thing nowadays as he was writing his foreword to the english translation of Karl Marx's Das Kapital back in 1886. I'm on the edge of my seat to see how it all turns out when Karl Marx gets around to finishing the sequel, which is racing to publication with George R R Martin's next book in his Game Of Thrones series.

Back in the short term the rally from yesterday's low has made a high of what seems like suspicious technical perfection. I drew in a possible channel resistance trendline on my 15min chart after the low yesterday, and that was hit at the high this morning with a perfect reversal there so far to establish the channel. SPX 60min chart:
The low yesterday was at the retest of the daily middle band and if we see a higher high today, though that seems doubtful, then possible resistance higher is at broken support at the upper keltner band at 2383/4. If SPX respects the now established falling channel then the next obvious downside target is the retest of rising wedge support from the November low, still in the 2348 area. SPX daily chart:
I'm rolling my ES, NQ & TF charts into June over the weekend so the futures charts below are still in March, with the differentials on price from the June contracts given on the charts.

The overnight high on ES was at obvious resistance at the weekly pivot backtest. ES Mar 60min chart:
The bull flag channel on NQ broke up with an obvious target at the retest of the ATH, but the high this morning was marginally lower at the backtesting of broken rising wedge support. Again a textbook rally high. NQ Mar 60min chart:
TF broke up from the falling wedge and has established a perfect falling channel. Again an ideal counter-trend rally high. TF Mar 60min chart:
What I would say is that it's rare to see such a series of perfect rally highs and reversals, which leaves me wondering if it's just too good to be true, but that may just be paranoia from seeing so many sweet bear setups fail over the last few weeks ........ probably.

We have an 'Ask Us' webinar for subscribers at theartofchart.net once a month and the questions for the one last night were particularly good. If you'd like to see that the recording is posted on the March Free Webinars page. Everyone have a great weekend. :-)

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