- 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.
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Thursday, 3 December 2020

Topping Trendlines

I was saying in my last post on Monday that a retest of the high looked likely and we saw new all time highs on both SPX and NDX as expected. So what now?

Well the best pattern on the board on Monday was the rising wedge on the Dow, and that is still looking pretty good. A daily RSI 5 sell signal has fixed there already of course, as one has on SPX as well.

INDU 60min chart: 

However that rising wedge on Dow is no longer the best pattern on the board as a simply beautiful rising wedge was established on SPX at the high this morning. A possible hourly RSI 14 sell signal is now brewing (also on NDX) and an hourly RSI 5 sell signal has fixed.

SPX 60min chart:

The daily chart on SPX looks very ready to roll over here. No more upside targets on SPX, NDX, IWM or INDU that remain to be hit and look like unfinished business.

SPX daily chart: 

We have a service at theartofchart.net that covers tech majors and sector ETFs. We send out charts a couple of times a week and the chart below is the hourly TSLA chart I sent out on Sunday. There is a dotted trendline above price that is the potential rising channel resistance trendline that is a theoretical resistance level. I put these on charts a lot in case they are hit.

TSLA 60min chart (Sun 29th Nov):

Here is the TSLA chart from today and as you can see, that rising channel on TSLA has now been established. Unless that breaks TSLA is also topping out here. It's just one (very large cap) stock but there are a lot of signs that a significant high is being made here.

TSLA 60min chart: 

We'll see how it goes but until we see some significant evidence to the contrary, my working assumption is that equity indices are topping out here. Our December Free Webinars page has been posted and I'd mention that our free monthly public Chart Chat is at 4pm EST on Sunday 6th December. Be there or be unaware! :-)

Monday, 30 November 2020

Thanksgiving Thoughts - Shorter Term

 November is about to end and SPX is likely at the time of writing to do something not previously done in the last twenty five years, which is to close a long way above the monthly upper band, currently 3566 area, only three months above the last strong punch close above in August. What does this mean?

Well on NDX this would give about 40-45% odds that the market would then deliver a series of closes at or above the monthly upper band in coming months, but while that is possible on SPX, historically there would be little precedent for it. The odds still favor a close at or below the monthly upper band at the end of December, at which point it would be unlikely to be over 3600.

SPX monthly chart: 

In terms of the SPX 45dma, the current all time high was made almost 10% over the 45dma, the highest of a lot of very high readings since the March low, and SPX is still very stretched to the upside by historical standards.

SPX daily 45dma chart:

In terms of pattern setups the best current pattern from the March low is on the Dow Industrials chart where that appears to be topping out in a high quality rising wedge. The action here seems to favor downside soon, with a daily RSI 5 sell signal already fixed on both this and the SPX chart, but that might need another high retest before reversal.

INDU 60min chart:

On SPX and ES retests of the all time highs were just missed on both and, together with a retest of the all time high on NDX, look like unfinished business above. That unfinished business could be finished later of course, but I'd expect to see those retests at most within a few weeks. SPX 60min chart:

In the short term the current retracement from  the high on ES looks like a bull flag, so we may be seeing those all time high retests in the next day or two, after which I'd be looking for at least some retracement back into the mid-3500s. A significant high may be forming here. ES Dec 60min chart:

The historical stats for last week leaned bullish but the stats for this week lean bearish including, unusually, the first day of the new month tomorrow. Looking for a retracement to start soon, ideally after those all time high retests.

I would also mention that we have been running our usual Black Friday sale on annual memberships at theartofchart.net until the end of November, and have extended that slightly until the end of Tuesday 1st December. During this sale we are offering four free months on an annual membership against normal monthly prices. We never raise subscription prices for existing members as long as memberships are renewed without breaks, so if you are thinking of getting an annual membership to theartofchart.net, then this is the best time to do that.

Our December Free Webinars page has been posted and I'd mention that our free monthly public Chart Chat is at 4pm EST on Sunday 6th December. We are also offering a free week this week on our Vega Options Service for anyone interested.