- 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
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Friday, 16 October 2020

Onward and Upward

 Last week I was looking at the IHS patterns that had broken up on SPX and NDX with targets at retests of their respective all time highs. We've seen some retracement this week but overall nothing has changed and I am still looking for the same targets, though the retracement has given more form to the current moves and is giving some clues as to where these moves will find resistance.

Starting with ES, where after the grind up on Monday I posted a chart on the subscriber twitter feed at theartofchart.net showing the rising channel established on ES Dec from the September lows, and with a slight adjustment that channel has held into the end of the week with a test of the low before the open yesterday morning. Resistance on that channel is now in the 3600 area so the IHS target is within that range.

ES Dec 60min chart:

On the SPX daily chart this retracement has been deep enough that by the time the all time high is retested there should be a high quality possible daily RSI 5 sell signal brewing. The daily upper band is expanding into the all time high retest area.

SPX daily chart:

There isn't a corresponding rising channel on SPX but there are a couple of decent rising wedge resistance trendline options that I'll be watching. Either would be a good fit for the retest of the all time high depending on the time taken to deliver that.

SPX 60min chart:

SPX broke back over declining resistance from the last high today so this retracement low is probably in, though a break below the ES rising channel support, currently at 3455 would open a possible lower retracement low. I'm not currently seeing any reason to expect that though, and this retracement low was close to the IHS neckline backtest that would often be seen with a pattern like this. I would note though that this backtest does increase the probability of hitting the extended IHS target, which is in the 3650 area, as the retracement started about halfway to that target.

SPX 15min chart:

On NDX a decent quality rising channel has been established, though NDX has been lagging since the retracement low so far and declining resistance has not yet been broken.

NDX 15min chart:

Two things to mention about next week. The first thing is something I was talking about on Wednesday morning in my usual premarket video for subscribers, and that is that there are four out of five trading days next week which historically close higher over 60% of the time. That makes next week one of the most historically bullish weeks of the year, and and ideal week to attempt a retest of the all time highs on SPX and NDX. I was saying on Wednesday morning that a couple more weak days into the end of the week could set that retest up very nicely and if we see an AM low on Monday that could run higher into the end of the week. I'll be watching for that.

The other thing is to mention that Stan and I did another trading commodities webinar at theartofchart.net yesterday looking at trades on oil, natural gas and gold. The recording is posted on our October Free Webinars page if you'd like to see that and I'd mention that in future, as these are mainly about designing options trades, we are expanding these to cover everything else we watch, so as other futures, sector ETFs and tech stocks. We are doing out next Big Five and Sectors webinar an hour after the close next Thursday, covering FAANG stocks The sector ETFs and if you'd like to attend you can register for that on the same page. Everyone have a great weekend :-)

Friday, 9 October 2020

In The Inflection Point

 I was looking at the inflection point setting up here in my post yesterday and it is now fully set up and looking good. At this stage I am looking for either a break up towards a retest of the all time highs on both SPX and NDX, or a hard fail that delivers new retracements lows, though we could see a limited retracement here that preceded the break up.

On the SPX daily chart there is no current divergence but SPX is now testing and slightly over the daily upper band.

SPX daily chart:

SPX has gapped up over rising wedge resistance at the open this morning. There is a possible alternate resistance trendline just above but if this is a wedge overthrow then it should reject downwards soon. If it doesn't reject soon, either today or Monday morning ideally, then the all time high retest on SPX and NDX is the obvious next target.

SPX 15min chart:

On the NDX daily chart, the daily upper band is also being tested and a possible daily RSI 5 sell signal is brewing.

NDX daily chart:

The IHS on NDX has finished forming and broken up and, if NDX is going to reject back down, then this is the ideal area to do that. We'll see how that goes.

NDX 15min chart:

This is a very decent inflection point setup and SPX and NDX could well fail back down here. On the overall setup here I'd be leaning towards 50/50 on whether it does though I'd add that in the event of a rejection into a lower low I'd be seeing that as a likely expanded bull flag retracement that would then probably deliver the high retests that would otherwise have been delivered directly from here. This is the sort of setup where the rejection might well get started on the back of bad news over the weekend, so I'll be keeping an eye on that too. Everyone have a great weekend. :-)