- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
- This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.
- I will be answering questions and responding to comments, so feel free to respond to any posts and I will see your comment even if it is not on the most recent post.
- If you're interested in seeing any intraday charts I post, I do that on twitter, and my twitter handle is @shjackcharts.
- The charts in the posts are as large as I can practically make them. if you would like to look at one more closely, click on it, and the link will take you to a larger version at screencast. If you click on that again, you will get a full page version, and can use the resizing function on your browser to enlarge parts of interest further.

Tuesday, 12 November 2019

So Far, So Good

I remember my father giving me an example a long time ago of the dangers of forecasting through extrapolation, and it was to imagine a man who had stepped off the top of the Empire State Building, and was overheard to murmur as he fell past the 51st story 'So Far, So Good'. The point is that regardless of how well the first part of a plan develops, one always needs to consider the possibility that it may wander significantly off track by the end. We shall see how the rest of the plan for November develops. :-)

I was saying in my premarket video this morning that I was expecting SPX to make an new all time high today, and while that might run a few handles higher, any new ATH should be marginal. So far that has delivered well.

Today's Premarket Video from theartofchart.net - Updates on ES, NQ, RTY, DAX, ESTX50, SPX, NDX, RUT, CL, NG, GC, SI, HG, ZB, DX, EURUSD, USDJPY, USDCAD, AUDUSD, KC, SB, CC, ZW, ZC, ZS:


The reason I was expecting any higher high today to be marginal was mainly based on the short term rising wedge from the 2855 low, shown on the SPX 15min chart below. As SPX has not tested wedge support since the last test of wedge support, a direct move to wedge resistance was unlikely. Coupled with other factors such as divergence and cycle expectations this is a very good place to be looking for the sharp retracement that would usually precede the more significant high that we are looking for later this month. Since I capped this chart, that rising wedge has been duly tested and has broken down.

SPX 15min chart:
On the SPX 60min chart, , if there was not already an RSI 14 sell signal fixed, then another high quality sell signal would be brewing now and close to fixing. The key supports that I am watching now are the weekly pivot at 3083.5, supported by the key 50 hour MA, currently at the same level. A break and conversion of these to resistance opens the downside for that larger retracement and I am watching that with great interest. The 50 hour MA is the key short term support level I watch on SPX and since SPX broke back above that in the 2920 area it has been support for the three significant retracements since then, not being significantly broken any of those times. If it holds as support here then that would set up another possible all time high retest next. If it breaks and converts to resistance then I would expect at least a test of the daily middle band.

SPX 60min:
The daily middle band is currently in the 3042 area, and if in turn that is broken then that opens up the main target areas for this retracement and these are the fibonacci retracement targets that I would normally expect to see on a break down from a rising wedge like the one on the 15min chart. Those target areas are the 38.2% target in the 3010 area, or the 50% (only an honorary fib level) target in the 2980 area, or the 61.8% target in the 2950 area. In this case I'm mainly looking at the 38.2% and 50% targets as the most likely.

I'd note the decent quality RSI 5 and NYMO negative divergence on the daily chart that is setting up the daily sell signal that could very much put those targets in play once that is fixed.

SPX daily chart:
After this retracement SPX should then make a new all time high and I have the ideal trendline for that marked on the hourly and daily charts, currently in the 3120-5 area but rising gently of course over time. That would likely be in the 3125-30 area by the end of November.

If you missed our monthly public Chart Chat then you can see the recording on our November Free Webinars page here. I'd also mention the FAANG stocks and key sectors webinar that we are doing after the close on Thursday next week. You can register for that on the same page if you are interested.

Monday, 4 November 2019

Upside Targets

As I was saying in my last post, SPX should be back into an upwards cycle by the end of October and that would be likely to end by the end of November. SPX has duly now made new all time highs and is likely to go higher. Let's have a look at the most obvious target area.

On SPX the initial rising wedge from the 2346 low is likely expanding into a larger rising wedge. Rising wedge support is now therefore in the 2915 area. The obvious overall target would then be the original rising wedge resistance, now in the 3110 area, and due to be in the 3130 area by the end of November. I would note the interesting fibonacci relationship here, in that if you take the move from the December low to the June low, and then add the same again to the June low, then the sum is 3111, which strengthens this area as a swing high target.

SPX daily chart:
Obviously after the strong move up over the last two trading days that target area is pretty close, and it could be that we are going to see the first test of that soon and then spend the rest of November topping out. We'll see.

SPX 60min chart:
There is an obvious target for this move on NDX as well, and I was interested to see that was hit this morning. That could be the start of a bearish overthrow, or NDX could be expanding up into an alternate resistance trendline. What is obvious though is that at the close on Friday there was a lot of negative divergence on the hourly and daily charts and by the close tonight most or all of that divergence will have been lost. SPX and NDX may well have higher to go this week.

NDX 60min chart:
Stan and I are doing three free public webinars at theartofchart.net this week, all of which are well worth attending if you are so inclined, and all of which can be found on our November Free Webinars page. The first is after the close on Wednesday at 5pm EST, and is a special webinar with Striker Securities looking at the history of the futures and commodity markets. One for the market history buffs, of which I am definitely one. The second is after the close on Thursday again at 5pm EST, and is on 'Trading Commodities - Setups And Approaches'. This is looking at some of the extremely interesting commodity trades setting up over the next year or two, in what is likely in my view to be the strongest of the main market groups over that period. The third is our monthly public Chart Chat on Sunday at 4pm EST. There we will be looking at the usual wide range of markets and instruments, and will be looking at the likely targets for the down move that we will be looking for after this current upward trend ends by the end of November.

Monday, 14 October 2019

Much Ado About Nothing

ES has spent the whole of October in a low cycle but so far the action has been all sideways, with a strong rally last week taking SPX back close to the highs on the hope of a China deal. There was a China deal, albeit more of a glorified breathing space while more talks continue on the many tricky points of contention on which there seems to have been little or no progress so far, and there was good news for Soy and Lean Hogs, which are now cleared for purchase by China. With the asian swine epidemic having had such a severe effect on herds Lean Hogs particularly look like a very interesting long here.

In terms of equities though it's hard to see much holding SPX up here in the wake of the China talks, and with the low window having extended somewhat due to this sideways action, SPX is still in a low cycle until the last week of October, before a high cycle into late November and then a low cycle into March/April next year. The pattern setup looks good for a decline into the low window and I'm leaning towards a subsequent all time high retest into the high window at the end of November, possibly to make the second high of a double top.

In the short term ES formed a high quality rising wedge within a larger rising channel with the wedge breaking down on Friday. Key support is the monthly pivot at 2963.50 and ES has been trading slightly above that most of today. I'm expecting that to break, but it seems that might not happen today.

ES Dec 60min:
Ideally though that break would happen today as the daily middle band on SPX is just below monthly pivot, now at 2959, and on a break back over the daily middle band like the one we saw next Friday that is not going to be sustained, then the usual rejection back below comes in the form of a strong rejection candle on the next trading day. If the middle band is backtested today and holds as support, then we could well see a retest of Friday's high next.

SPX daily chart:
Is there a case for going a bit higher before going lower? Well yes. SPX could be forming an overall  bullish triangle here and, if so, the next obvious target would be triangle resistance, now in the 3015-20 area, before a retracement that might then only take SPX back halfway to triangle support in the 2830-5 area. That's a possible scenario here, but not the likeliest one. The setup for more downside without that however would be much improved by a break and conversion of the 2960 area back to resistance.

SPX 60min chart:
One way or the other SPX will likely move back onto an up cycle by the end of October , and the longer SPX spends going sideways in the meantime, the less ambitious any downside target should be. If we see a definite turn down in the next day or two then a target back in the 2800 area still looks doable.

Thursday, 22 August 2019

Onwards And Downwards

It's been a while since my last post and my apologies for that. It has been an intense summer of medical treatments for my wife, exams and results for my children, computer upgrades and so on. I've been feeling somewhat drained.

However the market has so far avoided being as tedious as it often is at this time of year, and, if I'm not much mistaken, then the next leg down on equities has started this morning from a short term reversal setup that is really one of the nicest that I have seen in quite a while. I was going through that in detail across SPX, ES, NQ, RTY, DAX and ESTX50 in the video below before the open this morning.

Today's Premarket Video from theartofchart.net - Updates on ES, NQ, RTY, DAX, ESTX50, SPX, NDX, RUT, CL, NG, GC, SI, HG, ZB, DX, :
The rising wedge that I was looking at on ES before the open has now broken down, and ES should now be on the way to short term double top support at Friday's low 2894. A sustained break below looks for the 2848 area.

ES Sep 60min chart:
I still have an open target below at the 2822.13 SPX retest and that is a 5dma Three Day Rule target, which was just missed on the last swing down because a triangle is likely forming here. In the cases of the previous two times this has happened since the start of 2007, that target was not hit before the retest of the previous highs (all time high in the current case), but they were both bullish triangles. This one should be a bearish triangle, so the 2822 target should be hit on the way to the next downside targets.

SPX 5dma chart:
I have sketched in the likely triangle on SPX and the obvious target for the wave D low is currently in the 2830 area. I'd then be looking for a limited rally, perhaps into the 2850-70 area, before the triangle break down, ideally towards the 2730 area for a more serious low there.

SPX 60min chart:
Stan and I are doing two free public webinars tonight, and if you are interested in attending either, or both, you can sign up for those on our August Free Webinars page. The first webinar is at the RTH close, 4pm EST, on My Favorite Setups Using Futures And Options - Part 3', and the second at 5pm EST is our monthly free webinars on FAANG stocks and key sectors.

Friday, 2 August 2019

A Decent Start

SPX delivered some wild moves this week, helped along by the White House Staff's ongoing failure to gain control of the President's twitter account, but at the end of the week SPX has reached the obvious first target at a test of the 2915 support area, and there is a short term inflection point here. This is the retest of the late June low, just above a big open gap from 2889.67, and is a possible H&S neckline area. If SPX was to rally from here the ideal right shoulder high would be in the 2964 area, and that would set up a possible H&S that on a sustained break down would look for the 2800 area, with obvious serious support on the way at rising wedge support, currently in the 2870 area.

Support for a rally here also comes in the form of today's break below the 3sd daily lower band, which generally delivers a decent bounce short term, subject to further unexpected tweets over the weekend of course.

SPX daily chart:
SPX 60min chart:
Everyone have a great weekend. :-)

Friday, 26 July 2019

Topping Out Here ........ Probably

In my premarket video this morning for daily video service at theartofchart.net I was saying that until demonstrated otherwise I was expecting to see all time retests on ES and NQ before a possible swing high (and potential significant top). That high retest is at 3027.75 on ES and the high today so far has just missed that by 2 handles so far. That full test is likely needed before the turn. There is a very nicely formed nested double top setup formed on ES and SPX and that just needs a decent turn down to set the next move in motion.

ES Sep 60min:
The equivalent target on NQ is 8051.75, again not yet reached.

NQ Sep 60min:
In terms of the overall structure from the December low SPX is just under rising wedge resistance and this would be an excellent fail area, though wedges can overthrow of course, and I do have a possible alternate wedge resistance trendline now in the 3045 area. There's no negative divergence on the hourly chart here but ......

SPX 60min chart:
.... there is plenty on the daily chart, with the RSI 5 sell signal already fixed and a possible weak RSI 14 sell signal now brewing. This is a solid looking setup just waiting for the actual turn, though it's hard to overstate the importance of seeing that actual turn of course. Sweet setups don't always deliver.

SPX daily chart:
Stan and I did two free public webinars yesterday on the Big Five and Sectors (AAPL, AMZN, FB, GOOG, NFLX, TSLA, IBB, IYR, XLE, XLF, XLK & XRT), and the second on favorite setups using futures and options. Both are posted on our July Free Webinars page if you'd like to see those.

Everyone have a great weekend :-)

Friday, 19 July 2019

Daily Sell Signals Have Fixed

The daily RSI 5 / NYMO sell signal that was brewing last week has fixed on this first decline from the all time high and has not yet reached target. The rising wedge has broken down into a test of the daily middle band so far, and I am looking for a reversal pattern to form. The obvious options are either to retest the all time high to make the second high of a small double top or to head further down towards the 2964 area and the possible H&S neckline there.

SPX daily chart:
I was talking on our free public 'favorite setups' webinar last night about the importance of the 50 hour MA on SPX, and that was resistance on SPX at the high yesterday, and while that was broken slightly at the highs today, that was not converted back to support and has rejected late in the day. The obvious next target for me is another test of the daily middle band, now at 2973, and a likely break down towards the mid 2960 area and the possible H&S neckline support there.

SPX 60min chart:
ES broke back over the weekly pivot today but failed to convert that to support either.

ES Sep 60min:
Stan and I did a free public webinar yesterday looking at some of our favorite setups. If you missed that you can see the recording on our July Free Webinars Page. We looked at examples of charts from this week and if you watch the video you can see how the setups we looked at delivered nicely today.

Neither Stan or I spends much time talking about setups we look at in these webinars in retrospect, as we both feel that it seems like boasting, and there is already plenty of that on twitter without us pitching in. It also smacks of vanity, which can be a fatal flaw in any analyst. That said, our marketing people point out that referring back to past successes might be be better described as marketing rather than bragging, so that being the case I'll talk quickly about the two setups that I was talking about last night in the webinar, and that you can see on that recording.

The first setup was buying or selling the 50 hour MA in a backtest during the trend, and obviously you can see the reaction to the fail at the SPX 50 hour MA today. The other setup I looked at was the double bottom on CL yesterday afternoon. I was looking at that on positive RSI divergence, and noting that the double bottom target in the 56.50 area was both a strong match with a 61.8% retracement of the last leg down, and with a test of the monthly pivot at 56.46. I was saying that CL was a decent looking long into that target and an interesting short when it got there. The overnight high was at 56.49 and the subsequent low today was 55.12 so both were nice calls. We do a lot of nice calls but don't usually mention them, but my point is that the free public webinars are always worth watching IMO.

Everyone have a great weekend :-)

Wednesday, 10 July 2019

Daily Sell Signals Now Brewing

In my post last Friday I was talking about the likely retest coming of the new all time high on SPX (and ES), and how that should set possible daily RSI sell signals brewing on SPX (and ES). We saw that ATH retest and marginal new ATH this morning and I am now looking for a high. It is possible that SPX/ES might go a bit higher but I wouldn't expect much higher and I'd note that there is already a decent quality double top setup here and that on a sustained break below 2964 the double top target would be in the 2923 area.

ES Sep 60min chart:
On SPX the smaller rising wedge has broken down but it is still possible that the larger wedge resistance trendline might be a target. That is now in the 3025 area.

SPX 60min chart:
On the daily chart we now see the RSI topping configuration that I was looking for to form in my last post. Today is the middle of this high window so i am looking for a high to form. The key support level I am watching for support here is the level that held at the low yesterday, at the 50 hour MA on SPX, now in the 2971 area.

SPX daily chart:
If you missed Chart Chat on Sunday you can see the recording posted on our July Free Webinars page.

Friday, 5 July 2019

Coming Into The High Window

Apologies for the long delay between posts. My wife has been having a serious health issue including some surgery so I have been very distracted.

In my last post I was looking for another high retest, and we have seen that, with a push this week into the psychologically important 3000 area after the close on Friday. So what now? Well the next high window slipped back from late June into the middle of next week, and we are looking for a significant high, and very possibly the 2019 high, to form in this area. In the short term I'm expecting SPX to test the new ATH on ES and I have a high quality possible rising wedge trendline currently in the 3005-10 area which would be a solid match with that.

SPX 60min chart:
On the daily chart a possible daily RSI 5 sell signal is now brewing, and that high retest might well set an RSI 14 sell signal brewing as well.

SPX daily chart:
On NDX a marginal new ATH has been made and there is now a near perfect nested double top setup for what could be a very serious pullback. Again a possible daily RSI 5 sell signal is brewing.

NDX daily chart:
Stan and I are doing our monthly free public Chart Chat on Sunday, and if you'd like to attend you can register for that on our July Free Webinars page. Our annual July 4th sale is also on until the end of this week and if you are interested in picking up a discounted annual subscription you can do that here. Everyone have a great weekend :-)

Friday, 14 June 2019

Sometimes It's Just a Flag

SPX made a high early this week, broke down from a decent quality falling wedge and the obvious retracement targets were either the 38.2% or 50% retracements in either the 2840 or 2820 areas before another likely leg up.

Sometimes however any initially promising looking topping pattern evolves into a flag as the index trades gently sideways to down, and so far at least, that is what has been happening here. SPX may yet make a lower low, unless this is a triangle forming here, in which case SPX would likely test triangle support in the 2876-8 area before breaking up into a new high for June. If we are going to see a full retest of the all time high, I would expect to see that on this leg up into the next high window in the last few days of June, and then likely lower.

SPX 15min chart:
On the hourly chart the RSI 5 sell signal reached target and the RSI 14 sell signal reached the 50 level, which is often support before another higher high on price and lower high on RSI. Looking for that next.

SPX 60min chart:
On the daily chart the retracement has tested the 50dma and found support there so far. A higher high on SPX would likely set a possible RSI 5 sell signal brewing, though if that leg up reaches the retest of the all time high then this modest negative RSI 5 divergence might not survive that far.

SPX daily chart:
Everyone have a great weekend. :-)

Tuesday, 4 June 2019

The Next Inflection Points

In my post 'Important Support Breaks' on 2nd May, as SPX was starting to break down after the new all time high, I was talking about the ideal retracement target at the possible H&S neckline in the 2722 March low area. SPX bottomed out yesterday at 2728 and in practical terms that target area I gave has been hit. The low from there was decent and on the chart below I have inset the tweet I put on our (subscriber only) twitter feed just after that low calling the possible nested double bottom setup with an overall target in the 2799 area, and obviously that has been playing out since and is almost at target.

ES Jun 60min chart:
So what now? Well the two main options, assuming that SPX is now in a rally period into the next cycle high window in late June, are that either that larger H&S right shoulder forms over that period, with an ideal high area effectively at the SPX monthly pivot at 2819, or SPX makes a sustained break back up over the monthly pivot soon and then likely looks for another all time high retest. Either way, after June most likely SPX will go lower than we say yesterday.

Supporting the right shoulder scenario, the daily RSI 5 positive divergence on SPX and RUT was lost at yesterday's close, so the buy signals that fixed after the low were hourly signals rather than daily. That isn't supporting a big move higher, as most of those have already made target, though we could see that move in any case of course.

On the chart below I have drawn in the highest probability paths over the next few weeks with the key potential inflection points that I'll be watching. I am favoring the H&S right shoulder scenario as long as monthly pivot holds as resistance, and also as long as the break down from the H&S after the right shoulder forms isn't rejected hard after that break down.

SPX 60min chart:
The weekly and monthly pivots are marked on the daily chart below, on which you can see that SPX has now reached the minimum 38.2% fib retracement target from the broken rising wedge from the December low. In theory SPX could head up directly from here into sustained new highs, but that isn't the higher probability scenario in my view.

SPX daily chart:
Stan and I did our monthly free public Chart Chat on Sunday and if you'd like to see the recording that is posted on our June Free Webinars page. We run trading courses a few times a year covering swing and day trading and these are, even if I do say so myself, and as far as I can see, the cheapest and best available anywhere. We are starting our next course in a couple of weeks, and if you are interested you can see more details about that here. We run live trades as part of the course and on the last one I set up a CL trade live that on a minimum position made a minimum overall profit of $2k. I'll be digging up the details on that for a post, but the course only costs $499 for non-subscribers. Just sayin'.

I've been very busy but I'm going to be trying to do two posts a week at minimum going forward. In the short term I'm expecting to see resistance in the 2795-2820 area and we may well be chopping around in the range between yesterday's low at there for most or all of the rest of June.

Monday, 27 May 2019

Choices, Choices

One way of looking at markets is as a succession of inflection points or probability forks, at which there are generally a higher and lower probability option which, once taken, take the markets to the next in that series, either eliminating or significantly changing the paths not taken at that inflection point.

We've been looking for one of those inflection points to happen at about this time, and in about this area, and that is likely to be resolved over the coming week, so in this Memorial Day post I'll be looking at that and what the shorter and longer term implications of the direction taken from that on SPX.

Back at the end of December I wrote a post 'Goodbye To 2018' that the key resistance level to hold on any rally would be the monthly middle band, and that a monthly close back above would likely deliver a new all time high in 2019. On 15th February, after the break back over the SPX monthly middle band at the end of January I wrote another post 'It Sounds Wild But .....', where I was talking about the possibility that that all time high retest might make the second high of a large double top, and we have now obviously reached the stage where that pattern is visibly forming, though of course it doesn't need to finish forming, or indeed play out to target if it breaks down.

That said, it is a very high quality potential pattern. The target area would be close to 1800, a double fib retracement area with the 50% retracement of the bull run from the 2009 low and the 61.8% retracement of the bull run from the 2011 in the same areas. Double top support at 2346.58 is also close to the rising support trendlines from the 2009 and 2011 lows. This is a very attractive setup,and it has potential to deliver that move in the right environment, which could be delivered if the trade war news, already heading south, continues to deteriorate.

SPX monthly chart:
In the shorter term, looking at the retracement so far from the new all time highs in 2019, there is a 5dma Three Day Rule target at a full retest of the May low at 2801.43, not yet quite delivered on this last move down, though NDX and RUT have both already made lower lows. That Three Day Rule target is an exact target, though there are a couple of rare past exceptions when overall triangles have been forming, which doesn't currently appear to be the case here. I am therefore expecting to see a full retest of 2801.43 on SPX sooner rather than later in the coming week.

As and when we see that full retest, that takes us fully into the next inflection point on SPX, with possible daily RSI 5 buy signals then forming on all of SPX, NDX and RUT, and indices in the clear low window with the centre of that window seen last Friday.

SPX daily chart:
The short term setup here on SPX/ES is fully formed H&S patterns on SPX/ES with targets in the 2640/50 area. Again this is an attractive retracement target, at a 50% retracement of the move up from the December low. As a general rule we regard the inflection point options as a 70/30 probability split, so reaching that target here would be the 30% option. The more likely option on the timing cycles would be a rejection at the break below the H&S neckline, delivering ideally (for me) a retest of the all time high, in what might well be the second high of a smaller double top, or alternatively (for Stan) a consolidation below 2900 area resistance before the next leg down. If ES is going to reject back up, then that might well be after a touch of possible falling wedge support

ES Jun 60min chart:
On NDX the setup here is another H&S that has already broken down slightly, though it may be that the head has just been completed on an H&S with a flatter neckline. Either way, if the H&S delivers a sustained break down, the target would be in the 6650-6750 area, just over the 61.8% fib retracement of the move up from the December low.

NDX 60min chart:
On RUT the setup here is a double top that has already broken down slightly before this latest bounce. On a sustained break down the target would be in the 1370-90 area, significantly more than 61.8% of the move up from the December low.

RUT 60min chart:
We are regarding the odds at this inflection point as 70% to find support after a modest lower low and rally there for several weeks, and 30% that we see a sustained break down towards these pattern targets on SPX, NDX and RUT. That said, bad news may push the market down and the trade war news so far has been impressively grim, with no sign of that being likely to change over the next few weeks, and with signs that the situation may deteriorate significantly further over that period. We shall see.

A couple of announcements today. An hour after the close on Wednesday Stan and I will be doing the third webinar in our Trading Commodities - Setups And Approaches' series. If you'd like to attend you can register for that either here, or on our June Free Webinars page. We are also doing our free monthly Chart Chat on Sunday, as it is the first Sunday of the month, and if you'd like to see that you can either register for that on the same page, or directly here.

Stan and I have also launched a new metals and energies service looking at some important stocks in these areas. Those tickers are AG, GOLD, KL, MUX, SBGL, USO and UNG. If you're interested in a free trial you can see more details here: This new service and our Big Five and Sectors service are both included in a 20% Memorial Day sale lasting until the end of this week, and, as with all our discounts, that discount lasts through the lifetime of the subscription, with no price rises ever applied while any subscription is continuous.

Everyone have a great holiday! The rest of the week should be interesting.

Wednesday, 22 May 2019

Three Day Rule Target At 2800 Retest

SPX broke back over the 5dma last Thursday and that put SPX back on the Three Day Rule, which is that after a decline of more than 2% followed by a break back over the 5dma, then SPX must hold above the 5dma the next two daily closes. If SPX fails to manage that then the retracement low (2801) should be retested before the initial high before the decline (all time high). The close on the third day on Monday was a clear break back below the 5dma. That low retest would normally be soon after the break and this a very strong stat, so I am looking for that 2801 retest. 

SPX daily 5dma:
In terms of the timing of that retest there are a few things to consider. The first is that the next cycle window is close, with the middle of that window on Friday this week. That can run into the middle of next week but that is not a lot of time to make this low. Unless there is some really impressively bad news the next retracement low may not be much below 2800. We will see.

What are the support levels? Well I have possible H&S necklines in the 2785 and 2722 areas, with 2722 being my preferred option since we started this decline, though that's a long distance below unless we start seeing some serious moves to the downside. I'd note that the daily 3sd lower band is now in the 2765-70 area, so a fair match with my first support level not far below 2800, and that on a sustained break below 2800 would now fix an H&S target in the 2650 area.

Given the short time available though, I'd note that the H&S setup here is very much a two edged sword. If that SPX neckline in the 2800 area breaks down, and then SPX rallies enough to invalidate the H&S with a move over the right shoulder high at 2892.15, then there would be a strong Janus Flag target at a retest of the all time high, and we will be looking for a possible strong rally back into June, so that would be a decent fit with cycles.

To start the move down into the 2800 retest the first support level is at the weekly pivot and 50 hour MA on SPX in the 2851/2 area. A break and conversion of that to resistance opens the low retest.

SPX 60min chart:
On the daily chart I'd note that on a retest of 2800 from here, then a possible daily RSI 5 buy signal would start brewing. On the retests of the retracements lows on NDX and RUT, similar daily buy signals would likely also start brewing. SPX daily chart:
 
The remaining cycle trend days this week are today, not looking too trendy so far apart from on CL, and Friday. There is a big news day tomorrow with the Fed, and random news bombs can come at any time of course on trade war updates. The trade war news has been pretty grim over the last few days, and that being the case I'm a bit surprised that SPX isn't closer to a retest of 2801 already.

An hour after the close on Thursday 28th May Stan and I will be doing the third webinar in our Trading Commodities series. If you'd like to attend you can register for that directly here, or on our May Free Webinars page of course.

Wednesday, 15 May 2019

X Marks The (Ideal) Spot

Before the open this morning I was cautiously predicting that ES would rally today to a higher high than yesterday, ideally failing today at a high in the 2865-9 area. As it happened the low of the day was happening at the time on ES, slightly before the RTH open, and ES is now testing yesterday's high. So far, so good.

Full Premarket Video from theartofchart.net - Updates on ES, NQ, RTY, DAX, ESTX50, SPX, NDX, RUT, CL, NG, GC, SI, HG, ZB, KC, SB, CC, ZW, ZC, ZS, DX, EURUSD, USDJPY, USDCAD, AUDUSD:
The scenario I was looking at then and now was a modest higher low and then a modest higher high to form a bear flag channel into a test of declining resistance from the highs on SPX. I have tentatively marked an X on the SPX 5min chart the ideal time and level for SPX to top out today and we'll whether that delivers exactly in the next hour or so. If not there is some wiggle room. 

SPX 5min chart: 
On the hourly chart I show the overall falling megaphone forming from the high so far. Declining resistance and the 50 hour MA are effectively the same resistance area at the moment.

SPX 60min chart: 
In the event that declining resistance and the 50 hour MA are broken and converted to support, which is possible but not looking particularly likely at the moment, then resistance higher is at the daily middle band, currently 2903 area, and the monthly pivot at 2914. SPX daily chart: 
An hour after the close tomorrow Stan and I are doing our free monthly public webinar on big five and sectors, covering AAPL, AMZN, FB, GOOG, NFLX, TSLA, IBB, IYR, XLE, XLF, XLK and XRT. Given the current market action that should be pretty interesting, and if you'd like to attend you can register for that here, or on our May Free Webinars page.

Monday, 13 May 2019

The Battles Of The Band

On Thursday before I wrote my post SPX went a few handles below the daily 3sd lower band, and as I'd generally expect we saw a strong rally from there. On Friday, somewhat to my surprise SPX again went a few handles below the daily 3sd lower band, and we then saw an even stronger rally off that low. This morning, with the daily 3sd lower band currently at 2816, the current low of the day is a few handles lower and we're probably going to see another rally, though it's hard to say whether it will be as strong as the others.

Obviously the daily middle band is now turning down, and the lower it turns and the wider the bands become, the further down the daily 3sd lower band will extend, SPX could just keep riding this down.

The current level is important though. I was asked a couple of weeks ago where I would expect the retracement to go, and I gave two targets. The first target is the current area, 2800-20, marked with the purple band on the SPX hourly chart below as an established strong support/resistance level. The second and preferred target is the 2722 area, at the full retracement of the rising wedge from the March low, and the 38.25 fib retracement of the rising wedge from the December low, also a possible larger H&S neckline. Stan  ran the cycles last Thursday night with updated data and the next cycle window is a low window in two weeks. That is where I would like to see SPX at that low.

In the meantime I'm still looking for a possible wave B retracement, with the caveat that we may already have seen a very fast B wave rally on Friday. If that is not yet done I'd be looking for strong resistance at the daily middle band, now at 2909, and the monthly pivot at 2914. A break and conversion of those levels to support could trigger an ATH retest.

SPX daily chart:
On the hourly chart SPX is testing a big support zone here, and this would be an obvious level to rally from. I'd note that hourly RSI 14 buy signals fixed on all of SPX, NDX, and RUT on Friday though of course a very strong trend can overwhelm these. SPX is testing a high quality falling megaphone support trendline that may hold.

SPX 60min chart:
No current divergence on the ES 60min chart, though ES is testing trendline support here as well.

ES Jun 60min chart:
One thing I was looking at on Friday that was encouraging for a rally on equities here was the strong reversal setup on USDJPY formed on the initial break of major double top support and annual pivot test. A 60min buy signal fixed and a high quality double bottom setup formed. Obviously there is a very decent correlation between USDJPY and SPX. Overnight that long setup fell apart with a strong break below the annual pivot towards the double top target considerably lower at 106. Obviously that is not that encouraging for a strong rally, though it is encouraging for my main target in the 2722 area being reached. We will see.

USDJPY 60min chart:
Regardless of a possible stronger rally here, SPX is trading under the daily 3sd lower lower band as I write, that is strong support for today and on a daily lower band ride we would almost always see a test of the daily 2sd lower band at some point during the day. That is currently at 2846.

An hour after the close on Thursday Stan and I are doing our free monthly public webinar on big five and sectors, covering AAPL, AMZN, FB, GOOG, NFLX, TSLA, IBB, IYR, XLE, XLF, XLK and XRT. Given the current market action that should be pretty interesting, and if you'd like to attend you can register for that here, or on our May Free Webinars page.

Thursday, 9 May 2019

Taking Stock Here

Last week I was looking at support that needed to be broken at the SPX daily middle band to open further downside and obviously SPX did that and could be at or close to the wave A low here, looking then for a B wave rally, and then a C wave down into the next low window and to complete the current move. On Sunday's free public Chart Chat I was talking about a possible H&S target in the 2840 area which was reached at the lows this morning. If you missed Sunday's Chart Chat or would like to see that again, that is posted on our May Free Webinars page.

We hold a subscriber only webinar every month at which we answer any questions attendees have, and review important markets in response to those questions, and we are holding one tonight at which, this time only, all are welcome. So if you'd like to see that you can register for that on our May Free Webinars page or you can register to attend using this direct link.

So where are we up to on the SPX daily chart? Well the short term H&S target at 2840 has been reached and the daily RSI 5 sell signal has reached target. The low today was just under the 3sd daily lower band, currently at 2839, and SPX has also currently broken below the 50dma now at 2859. If the B wave has now started then the rally should respect either 2900 or the monthly pivot at 2914. A break and conversion of the monthly pivot at 2914 to support at this stage might well finish this move early and deliver another all time high retest. After the Wave B rally we would ideally see a high latest Monday, down into the next cycle low to be made middle to end of next week.

As I was saying on Chart Chat, my ideal target for that low would be at the 38.2% retracement and retest of the March low at 2722, but I also mentioned possible support in the 2800-20 area, and a possible alternate H&S neckline in the 2785 area.

SPX daily chart:
In the short term the current low is now on any hourly or daily positive divergence so while the Wave A low may be in, it is unlikely that the main retracement low is in. Any rally here should just be a rally before lower lows in the near future. We shall see. 

SPX 60min chart: 
Everyone is welcome at tonight's webinar an hour after the close. Hopefully I'll see you there