SPX retraced a bit yesterday, rather more so than the daily candle suggested, as the retrace of the channel from Friday's low to yesterday's high was close to the 23.6% minimum in a strong trend. I'm expecting more, but it may go the other way.

If we are going to see more retracement then I'm looking for a double top or H&S to form here to take SPX down towards the obvious targets at rising support from the 1871 low and a retest of the daily middle band, now at 1948. SPX 15min chart:

Not Staying Here Long

SPX daily chart:


Well that certainly wasn't a rejection candle yesterday, with the daily candle closing some 30 handles above the close on Friday, and with the close clearly above now broken falling channel resistance. However there is increasing negative divergence and I'm expecting some retracement soon. The first obvious target would be a retest of the daily middle band, now at 1948. SPX daily chart:

Expecting Retracement Soon

There is no 60min signal yet, but both RSI 14 and RSI 5 are very overbought. A 5min sell signal fixed yesterday afternoon, and any significant weakness this morning should fix the 15min sell signal that is also brewing here. It's too early to have a definite pattern for this rally but the main target on any retracement may be rising support from the 1871 low, currently at 1916 and rising at about 13 handles per day. Ideally I'd be looking for that to be tested in the 1940 area late tomorrow or early on Thursday. A break of that rising support would most likely mean that this rally high had been made, though until then I'd be looking higher. SPX 60min chart:

Bulls had a weak start but recovered strongly yesterday. That set up a rising channel that on the bigger picture is likely to be a bear flag. I was carefully considering upside resistance levels within that flag but the NFP number was bad, and it seems likely that the bear flags of various kinds on the various equity indices are likely to break down this morning.  Scan 3x 60min SPX INDU TRAN charts:
NFP Disappoints
Scan 3x 60min NDX RUT NYA charts:

The ES chart that I posted last night showed a falling megaphone that was close to a resistance test, but with the observation that there was a fixed double bottom target at 1920 that I would expect to be hit, so in that case megaphone resistance would have to break. That megaphone is now broken and ES has made the double bottom target. ES 60min chart (last night):

A Distant Memory of Sleep

On the NQ 60min chart I posted last night, I was looking at another falling megaphone there, and a double bottom with alternate targets where the less ambitious target was close to the likely test of megaphone resistance. NQ 60min chart (last night):

A Distant Memory of Sleep

Here is how NQ looked when I screencapped it earlier this morning, with a hit and perfect reversal at megaphone resistance. Since then the rising channel from Tuesday's low has broken down, and the odds are decent that the high for today has been made overnight. NQ 60min chart:

A Distant Memory of Sleep

If that NQ megaphone resistance breaks today, and depending on the correlation today with ES/SPX, possibly if it doesn't, then there is a decent case for seeing a test of the SPX daily middle band at 1945/6, as there is a cluster of significant resistance levels there that makes it both an attractive target, and likely strong resistance. We may well not see that however. The main chart service is updated on Wednesdays and Sundays and as all my charts are very handmade with written notes, doing 35-40 charts after the close on Wednesdays is one reason why I'm not sleeping as much as I was. That's getting easier though as I get all the templates set up as I would like. I do a quick review of  SPX, NDX, RUT, ES, NQ, USD, oil and gold after the close every night and will now be starting to post the interesting ones within three hours of the close on the daily video page as bonus charts. This is something I've been working up to, but after almost no-one saw the chart below that I prepared after Tuesday's close, and that was a real shame given what happened over the following 24 hours, I've decided to start that from today. SPX 15min chart (from Tuesday night):

A Distant Memory of Sleep

Today may well be very interesting, and may well be an inverted V day, with a high that gets sold very hard into a retest of Tuesday's lows by early next week, NFP permitting of course. 

Source: Springheel Jack

SPX falling channel support held again yesterday and that has delivered a strong bounce from the trendline that would normally follow. We are now at an interesting stage where at the close last there were fixed buy signals on both of the SPX 60min RSI 14 and 5, and also on the 15min RSI 14 and 5.

So have we made the low for the current move down? Most likely not, or at least it would be a funny looking low. Stan and I are thinking sideways consolidation before the low is made and I'm looking for much or all of this impressive gap up on SPX to be given back by the end of the day. Channel resistance on SPX is in the 1925 area and I have that falling at about 12-4 handles per day. I think that is more likely to be hit tomorrow than today, though I could be mistaken.

Most of the indices are showing decent patterns from the FOMC high, with the exception of TRAN which is showing a perfect broken and retested declining resistance trendline: Scan 3x 15min SPX INDU TRAN charts:


I was sorting out an issue with my sons' school this morning so today's post is both later and shorter than usual. Fortunately the setup really doesn't get much easier than the choice the market needs to make this morning.

The low yesterday was at the falling channel support I posted yesterday morning, and the low this morning retested that a little lower. So far that channel support has held. If it continues to hold then I currently have falling channel resistance in the 1937/8 area, not far below the daily middle band at 1946. That's a nice looking target area. The open 15min RSI 14 and RSI 5 signals support this rally scenario.

If the falling channel breaks down then the downside targets open up, and the path to a retest of the 1820 low opens up three to four days earlier than it would if SPX was to retest it within the falling channel. SPX 15min chart:


It has been a choppy few weeks, but on the weekly chart the whole period has been part of a weekly lower band ride that is now starting week 8. The weekly lower band closed last week at 1918 and SPX looks likely to open close to it.

The weekly 3SD lower band closed last week at 1849 and Stan and I are thinking we could see that level tested and possibly lower this week. SPX weekly chart:

Panic Low Retest Coming

In terms of the pattern structure here the overall decline is within a falling channel with channel resistance in the 1995 area and channel support in the 1770 area. A lot of these channels evolve into falling wedges, so we may well not see a test of channel support on this current move.


SPX only made the 23.6% fib retracement of the falling wedge that broke up yesterday, forming a bear pennant/triangle from the falling wedge low that has broken down this morning. This kind of retracement is indicative of a strong trending move and suggests also that the falling wedge is evolving into a larger pattern, which I am cautiously assuming is a larger falling wedge.

If so then falling wedge is in the 1907 area at the time of writing, and declining at about 14 handles per day. If hit this morning that would coincide with decent support in the 1903-11 range and we might well see a strong bounce there.

Longer term the full bear pennant target is in the 1860 area, which is a good fit with a retest of the panic low at 1867. Bigger picture falling channel support is currently in the 1780 area, and that may be the ultimate target for this move. SPX 60min chart:


I posted short term falling wedges on twitter last night, and these are 68% bullish of course. On the 68% bull option I'd be looking for a retest either of the daily middle band in the 1955 area, or on a break above that I'd be looking for a retest of broken rising wedge support, the 50 hour MA, and the 5 day MA, all in the 1969/70 area. SPX 60min chart:

Falling Wedges Testing Resistance

The daily middle band at 1955 should be strong resistance today, but that is daily closing resistance. A pinocchio through it intraday would be fine as long as the close is back under or at the middle band. SPX daily chart:


A few minutes after the close yesterday I tweeted an H&S target in the 1953 SPX area on a sustained break under 1986. With the large gap under the H&S neckline overnight, that's a target worth remembering today.

The market has now had a few hours to digest yesterday's revelation that the Fed is still as fearfully timid about even a slight push on the economic brakes as it is recklessly bold at flooring the accelerator at the slightest sign of trouble. Having climbed back onto my chair after falling off it with the shock of the announcement that the Fed is still too scared to raise rates by even 0.25% six years into this 'recovery', I've been looking at the impact of this momentous news on the pattern structures on the equity indices.

The good news for bears is that the setup is now a lot more obviously bearish. Both of the ascending triangles on SPX and Dow have evolved into decent rising wedges, the rising wedge on RUT has evolved into a bigger rising wedge, and TRAN may have too, although it might just be a bearish overthrow of yesterday's rising wedge. With no clear pattern on NDX (but a clear rising wedge on NQ), and an unchanged symmetrical triangle on NYA, this is now clearly leaning bearish. Scan 3x 15min SPX INDU TRAN charts:

Fed Shocks World

Scan 3x 15min NDX RUT NYA charts:


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