A Tale Of Two Indices

A decent quality rising wedge has formed from the early March low, and that broke down last week. That could be a bullish underthrow of course or the wedge could be expanding. If wedge resistance is hit again today then at minimum I will assume the wedge has expanded, and redraw the wedge support trendline accordingly.

SPX 15min chart:

SPX broke back below the daily middle band at the low last week, and then rejected the next day, retesting the upper band on Friday. The 3sd upper band closed Friday in the 4250 area, and I'd be seeing the 4250-60 area as a likely upper limit for any upside today.

SPX daily BBs chart:

NDX has been leading strongly to the upside and I mentioned a couple of weeks ago that the very nice rising wedge from the March low there might break up. In that event what I watch for is a backtest that doesn't break back below the rising wedge resistance trendline, and as long as that holds, as it did on the backtest last week, the rising wedge target here would be in the 17000 area. That may be what we are looking at here and we should have a better idea about that by the end of the week.

NDX 15min chart:

At the start of May there were two big indices testing strong resistance at the monthly middle band. That is at 4170 on SPX at the moment and we may see a modest break over that resistance at the monthly close tomorrow. That would be a significant technical break, though it would need a confirming close above next month.

SPX monthly chart:

NDX is a very different story. Tech has been leading to the upside and has really been the only strongly bullish segment of the market, albeit one that is strong enough to be dragging SPX up with it. On NDX there has been a very strong break up over the monthly middle band this month, opening a possible retest of the all time high. The large H&S that has broken down also failed on this move, and that failure has a target at a retest of the all time high, as with the wedge target on the NDX 15min chart. I am taking the possibility of an all time high retest on NDX very seriously.

NDX monthly chart:

Three weeks ago I was saying that the historical stats favored the bears into late May. That period has ended. The stats for this week are strongly bullish today, neutral tomorrow, and strongly bullish on Thursday and Friday. This is one of the most bullish leaning weeks of the year so we'll see what the bulls can deliver. After this week the stats lean generally neutral to bearish for June.

In the very short term there is significant negative divergence on the EQ & NQ hourly charts, and it may be that the overnight highs are close to the highs we will see today. We'll see.

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Back At Major Resistance

Well the bearish stats for Wednesday and Thursday this week did not deliver, which was remarkable yesterday as at the start of the day there were hourly sell signals fixed on all of ES, NQ, RTY & YM. That equities went up hard instead was an impressive show of strength, bringing SPX back up into a full test of key resistance at the monthly middle band, now at 4169.46, but not broken until there is a monthly close above it, and the main support/resistance trendline from the 2009 low.

That is still very strong resistance, but after the rejection back up here, and the very strong action over the last two days, I'm increasing the odds of a break above from 25% from 35%.

SPX monthly chart:

I posted my premarket video at theartofchart.net this morning on my twitter and I was talking again about something I was also talking about at the early May low. Then I was talking and writing about downside being limited by the proximity to the daily 3sd lower band, and this morning I was talking about the proximity to the 3sd upper band, estimating that ES was unlikely to get over 4240 today. The high today was at 4227, with a backtest of 4190-4200 from there. I'm expecting this to follow through on Monday to clear the rest of the negative divergence on the hourly and 15min charts.

SPX daily BBs chart:

On NDX, with both RSI 14 and RSI 5 sell signals currently fixed, this could still be an overthrow from the wedge I posted on Wednesday, but I would note that the break over the August 2022 high at 13720.90 is also potentially a break over double bottom resistance with a target back at the all time highs. From here I would expect to see either that move, or a rejection back into the October 2022 low at 10440.60.

NDX 60min chart:

In the short term on SPX a perfect rising channel has formed from the early May low, and the next obvious target within that rising channel is rising channel support, currently in the 4130 area. I think we may well see that tested on Monday or Tuesday next week.

SPX 15min chart:

Looking closer at the setup from the early May low, there is also a shorter term rising megaphone into that channel resistance which started breaking down at the lows today. I'm expecting that break to follow through to the downside early next week, then we'll see what happens there.

SPX 5min chart:

On the bigger picture I still think that the odds are 65%+ that SPX has topped out or is topping out short term for at least a decent retracement. Is there a chance that SPX will break up over resistance here instead of failing? Always, every good setup can always fail and go the other way, and I have currently assigned a probability of 35% to that.

I entered a model trade with 9x MES (micro-ES) just before the close on Friday 28th April short at 4190. That was stopped out even yesterday and I may re-enter, but am planning to watch what happens next week to see how this develops.

If you are enjoying my analysis and would like to see it every day at theartofchart.net, which I co-founded in 2015, you can register for a 30 day free trial here. It is included in the Daily Video Service, which in turn is included in the Triple Play Service.