- 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.
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Friday, 26 November 2021

Thanksgiving Thoughts

 UPDATE NOTE - Since I wrote this post last night, SPX/ES has obviously broken down from the asymmetric double top there with alternate targets in the 4540 and 4515 (both SPX) areas, though so far, NDX/NQ has not yet broken down.

So far this week SPX has defied the historically bullish tape over Thanksgiving and that strong historical bullish bias extends into the close on Monday. I was leaning towards seeing at least a backtest of the 4540 SPX area after that but it looks like we may see that before.

MAIN POST - 

The big number on the equity index board at the moment is the high SPX made a few days ago at 5.54% over the 45dma, which closed Wednesday at 4538. SPX is likely topping out here for a reversion to mean move, and the mean I use is that 45dma, so I'm watching for a setup to take SPX back to that area.

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could well be setting up for that backtest here and I'll be watching the next retracement with great interest. If seen, and then followed by new all time highs, then this could fix an upside target on SPX in the 6500 area, so that might well be a bullish backtest of course.

SPX daily vs 45dma chart:

In my last post on Monday I was looking for a new all time high on SPX to add to the one already in place on NDX, and we saw that on Monday morning. That set a possible daily RSI 14 sell signal brewing on SPX, and that sell signal fixed at the close on Wednesday.

Since then SPX has defied the bullish stats this week and retraced to test the daily middle band, now at 4670, as support. If that breaks and converts to resistance then that reversion to the mean move may well be in progress.

SPX daily chart:

Is there a setup to deliver a move to that area in place? Yes, there is a decent quality double top setup formed here, shown on the 15min chart below. On a sustained break below 4630.86 the alternate double top targets would be in the 4540 or 4515 areas.

SPX 15min chart:

NDX has also been testing the daily middle band, currently at 16202, as support, and that has held so far. On a break and conversion to resistance the daily RSI 14 sell signal brewing on NDX should fix as well.

I'd note that the other two main US indices that I track, the Russell 2000 and Dow Industrials, are both considerably weaker than SPX and NDX, and are both currently holding their daily middle bands as resistance.

NDX daily chart:

Is there are setup to deliver a move lower in place on NDX? Yes, a possible H&S is forming, and a sustained break below the 16100 area would look for the 15550 area.

NDX 15min chart:

The historical stats for the Friday and Monday after Thanksgiving are impressively bullish so I'm doubtful about seeing much downside before the historically bearish last day of November on Tuesday, but that being said, the same could have been said on Monday morning, and the fast new high then died into a retracement that lasted into Wednesday.

A couple of things to mention before the weekend. Last weekend we did our monthly free public Chart Chat at theartofchart.net with a look into what we are seeing for the first six months of 2022, and if you'd like to see that you can see that here, or on our November Free Webinars page.

On Wednesday we did our monthly free public Big 5 & Key Sectors webinar at theartofchart.net, and if you'd like to see that you can see that here, or on our November Free Webinars page.

We are also running our annual Black Friday and Cyber Monday sale with deep discounts on annual memberships at theartofchart.net, and if you are interested you can find out more about that here.

Everyone have a great holiday weekend :-)

Sunday, 21 November 2021

Options For Next High

 As I was saying in my last post on Monday, the all time high on SPX a few days before was at an impressive 5.54% over the 45dma and, excluding the spike up after the low last year, was one of the highest against the 45dma in the last decade. This is a good indication that SPX is topping out for at least a reversion to the mean move, that mean being the 45dma, currently in the 4517 area.

I was looking for retests of the high on SPX and NDX particularly to set possible daily RSI 14 sell signals brewing, and so far NDX has made a new all time high as expected, and ES (the SPX future) has also made a new all time high on Thursday night. SPX has failed to make a new all time high by less than one handle on Friday but we may well also see that on Monday, at which point a daily RSI 14 sell signal will also start brewing, joining the ones already brewing on ES, NDX and NQ.

SPX daily vs 45dma chart:

NDX looks very promising for a high being made in this area, as it punched 300 handles over the weekly upper band at the all time high made two weeks ago, and closed 280 handles above again on Friday. this has historically been an excellent indicator for at least a short term high being made or very close.

NDX weekly chart:

Are there any indications that equity indices might nonetheless break a bit higher in the short term. Yes, so there is a choice to be made here, as there so often is. On the RTY chart below you can see that while SPX/ES and NDX/NQ have been retesting the highs, a decent looking bull flag has been forming on RTY that may be setting up a high retest on RUT/RTY. If seen then a possible daily RSI 14 sell signal would start brewing there too.

RTY Dec 60min chart:

Exactly the same can be seen on and said of the Dow/YM chart. Again I am wondering whether this may be setting up a high retest.

YM Dec 60min chart:

Is there an obvious target above on SPX that I would be looking for in the event of a break higher next week? Yes. There is a clear resistance trendline above on SPX currently in the 2760 area, and if seen, I'd be looking for resistance there.

SPX 60min chart:

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could well be setting up for that backtest here and I'll be watching the next retracement with great interest.

We are running our monthly public Chart Chat at theartofchart.net today at 4pm EST and if you'd like to attend you can register for that here , or on our November Free Webinars page. We will be looking at the setup on equity indices here as well as the usual very wide range of other instruments. We will also be looking ahead into the first six months of next year.

There is another thing I'd like to mention. I'm developing a new daytrading room with my long term daytrading collaborator Paul Buckles. That's in late beta at the moment and I'm looking for a few of my longer term readers who daytrade to come and join us while we are making this ready for market. Obviously there would be no charge and we will be explaining our methods, which are mainly mathematical, as we do this. For any who then want to join when we launch the room there will be a reward in the form of a special discount for them. If you're interested email me on springheeljack666 at gmail dot com.