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SPX closed 4.5 handles under the upper bollinger band yesterday. This doesn't mean that the upper band ride has ended but it's important that the upper band at least be tested today and that support at yesterday's low at 1882.65 be respected today. If SPX has a strong day then I will be expecting the upper band to close today in the 1896-1900 range. SPX daily chart:

TGIF

Today is the last trading day of the week, so the close today is important for the weekly upper bollinger band, which tends to be very strong resistance on weekly closes. I'm expecting this to close in the 1895 area at maximum, and there is some play of up to five points or so up to the 1900 area. Any close over 1900 would therefore be a rare and bearish punch over the weekly upper band, though given that we are now in April, a punch above today might just be signalling that the Spring high will be seen within a few weeks and 50 SPX points or so. On balance however I am not expecting SPX to close above 1900 today:

TGIF

On the SPX 60min chart I was saying yesterday morning that I was expecting broken ascending triangle resistance to be retested this week, and that was retested at the low yesterday. Yesterday's weakness ran to that and the highest level of ES support at 1876/7 that I gave yesterday morning. As long as yesterday's low holds then the triangle target is in the 1933 area and I'm expecting to see that target made sometime in April. SPX 60min chart:

TGIF

On other markets I posted a chart earlier this week showing a nice bounce setup on GLD. That bounce starts in earnest as soon as GC can take back and hold 1300, which is being tested at the moment. GLD 60min chart:

TGIF

I have been reviewing a lot of charts to get an idea of direction on USD and the signals from those are very mixed. What I can say for sure is that most of those are predicting a big move starting soon. I'm leaning towards the USD bull scenario and that grew stronger yesterday with a break over short term IHS resistance. If USD can rise enough to break double-bottom resistance in the 71.6 area then USD should then retest the 2013 highs. USD daily chart:

TGIF

I'm expecting to see yesterday's low respected today and it will be a significant sign of weakness if it is not. I would be surprised to see SPX close over 1900 today.

Source: Springheel Jack

Yesterday morning I gave two options for the day and the first was that the SPX ride the daily upper band upwards. SPX closed a quarter point under the upper band so that was the option taken, and an upper band ride can last for several days, rising with the upper band at an average gain of 5 to 7 points per day. If we do the same again today then we should expect the close to be close to 1896/7 SPX. Strong support is at the middle band, currently at 1866. SPX daily chart:

Riding the Upper Band

NFP tomorrow is a wild card for any upper band ride of course, and there is strong resistance close above at the SPX weekly upper bollinger band. I am expecting that to close the week in the 1895-1900 area if SPX stays strong, and I wouldn't expect SPX to close more than five points above there. Next week the weekly upper band can rise another 10-15 points and I would in any case expect the daily upper band ride to finish by Wednesday or Thursday, so there is room here for a ride up lasting several days. SPX weekly chart:

Read more...

The bulls had a good day yesterday as expected and tested the daily upper bollinger band, closing effectively at the upper band. There are two main options here and the first, if this is a strong breakout, is that SPX would ride the upper band up at 5 to 7 handles per day for several days. The second is that we see some retracement here that might well retest the daily middle band, now in the 1865 area. SPX daily chart:

Breaking Up

The weekly upper band is strong weekly close resistance and slower moving at an average 10-15 points per week, but is could close this week as high as 1895-1900 and next week as high as 1910-15. There is therefore room for SPX to ride the upper band up if that's the way this goes. SPX weekly chart:

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It is April Fools' Day today and also the first trading day of Q2, which since 1990 has on average been the most bullish day of the most bullish month of the year. It seems very possible that the current all time high on SPX will be tested today and obviously this is an auspicious day for the bulls to be doing that.

It has been an impressive five full quarters now without a test of either the weekly lower bollinger band or the daily 200 DMA, and if that could be extended into the end of 2014 then the two full calendar years without hitting either would be only the second time in history that this has been achieved. I'll be taking a look at the historic charts to see what happened after the only other time this was managed in 1927/8, but it could well be that stock prices might then have achieved a permanent high plateau from which any significant decline would have become unthinkable. Heady times indeed.
On the daily chart yesterday SPX gapped hard over the middle bollinger band and did not fill that gap, closing convincingly over the middle band. Assuming that holds today then the next target is the upper bollinger band, now at 1886, slightly above the current all-time high at 1883.97. SPX daily chart:

The Bulls' Turn

The SPX weekly upper bollinger band is a good fit with the daily at 1888. That could rise to the 1900 area by the end of the week if there is a  strong break up. SPX weekly chart:

The Bulls' Turn

On the SPX 60min chart a retest of the highs is a test of resistance on the ascending triangle that I was talking about yesterday. The odds would favor a break up through that now I think, and if we see that then the triangle target would be in the 1933 area, not far below my wedge target at 1965. If we see a strong reversal there and the new rising channel breaks, then the bears should get another shot at breaking strong support at 1839/40. SPX 60min chart:

The Bulls' Turn

On Dow there is another new rising channel established, though no triangle. Dow needs to take out the last two lower highs in March and January before it can challenge the all-time high in December. I've seen a lot of talk about the IHS forming on Dow over the last few months and just wanted to mention today that any H&S or IHS in classical charting terms has to be a reversal pattern by definition, so this is not technically an IHS. The 'neckline' is obviously a strong resistance level though, and a break over that would still be impressive. Dow 60min chart:

The Bulls' Turn

I'm expecting a test of the SPX highs today and if we see a break up from the ascending triangle that should be respected, at least as long as SPX stays above broken triangle resistance. Triangles can be treacherous to trade so there is always the possibility of a false break up with these.

Source: Springheel Jack

To an extent Friday went much as I laid it out in the morning. SPX overshot the perfect retests of the daily middle band and the 50 hour MA by a couple of points, but on the NDX and RUT patterns I was looking at we saw perfect tests and reversals at pattern resistance. This gives the bears the edge as long as resistance on those patterns holds, and gives me two excellent marker patterns to watch as we wait to see whether the double-top on SPX is going to break support at 1839/40. 

 
While these last I'll be posting both of the NDX and RUT patterns every day, and on RUT the next obvious target is the double-top target in the 1130 area, the 61.8% fib retrace just above at 1132, and falling channel support which is currently in the same area. RUT 60min chart:
1795 or Boost
On NDX the H&S target in the 3500 area is now a decent fit with falling wedge support and the obvious next move is to that area. NDX 60min chart:
1795 or Boost
So far, so bearish, but the setups on SPX and ES are much more ambiguous here, with an impressive three bullish patterns established towards the end of last week, all of which must be broken before the double-top can play out. Two of those patterns were established on SPX, and they are a new rising channel from the 1737 low, and a 70% bullish ascending triangle. If that triangle breaks down then the 1795 area target is the same as the double-top target, but if it breaks up the target would be the 1933 area. SPX 60min chart:
1795 or Boost
The other bullish pattern is on ES and that is a rising channel from the low last week. Channel support is currently in the 1852 area and channel resistance is currently in the 1868 area, which if we were to see it would be yet another test of 1874/5 resistance on SPX. ES 60min chart:
1795 or Boost
On the SPX daily chart the close today is important. The high on Friday was a decent retest of the daily middle band. If that holds then the next target is a retest of the lower band, now at 1840, and if SPX can break back above the middle band then the upper band is now at 1886. SPX daily chart:
1795 or Boost
On other markets the EEM chart was mentioned to me a couple of times last week, and I've been neglecting that chart lately because it has been, and remains, rather uninteresting. EEM has been forming a large symmetrical triangle since the 2011 high, and is moving back towards triangle resistance. The available range within this triangle is now less than 5. I'm also not keen on triangles as I've mentioned before and while this triangle is telling us that we should expect to see a test of range resistance at 47.5 or range support at 32.5 in the not too distant future, it's hard to say which of those is more likely, though I'm leaning long on the basis that the last test of one of those was a test of range support. EEM weekly chart:
1795 or Boost
ES is at 1861 as I write, and if that holds into the open then the patterns on NDX and RUT will most likely break up. If that happens then we might well still see a test of the lows there, but the technical odds would be shifting significantly in favor of the bull side overall. On the bigger picture SPX is either topping out or consolidating here, and if we don't see a break down soon, then we're going to see SPX break up instead. 

Source: Springheel Jack

I was asked yesterday what odds I would give to the Spring high already being in and a retracement towards a retest of the 1550-1600 having already started. I replied that if this was a bullish setup I'd be giving odds and 90% +, but as it was a bearish setup I'd be thinking 70/30. That may be too cautious, but the bears have been having significant performance issues in recent years.

On the SPX daily chart the opening spike down tested the lower bollinger band, and made the low for the day there. At the time of writing ES has rallied about 12 handles from there and the obvious resistance levels are in the 1848 and 1856 areas on ES (1855 and 1863 on SPX). The obvious target for a strong bounce off the daily lower bollinger band is of course the middle bollinger band, and that is currently at 1863 SPX, the higher of those two resistance levels. SPX daily chart:

Topping Spectrum

On the SPX 60min chart double-bottom support is at 1839/40 and that has not yet broken down of course. If we see a bounce to test the daily middle band at 1863 SPX then it's worth noting that the 50 hour MA closed yesterday at 1864 SPX. That 1863/4 resistance should now be solid and if we should see a break over it now then may still just be trading a range rather than topping out. SPX 60min chart:

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SPX held 1874/5 resistance yesterday morning and then declined strongly to close eleven points under the daily middle band, which is a definite break downwards from the middle band. The next target is the lower bollinger band at 1841, just above double-top support at 1839/40. SPX daily chart:

Testing Range Support

Now that SPX is near the bottom of the current range again the question is whether SPX can break below strong support at 1850 and test double-bottom support at 1839/40. If we do the same today as we have in the last few days, with an AM high followed by a strong decline, then we will no doubt find that out this morning. Worth mentioning that AM high followed by weakness is a bear trend characteristic just as AM low followed by strength is a bull trend characteristic. SPX 60min chart:

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SPX closed back over the daily middle band yesterday but only three points above. In effect that is a close on the band as was the close on Monday, so SPX is consolidating around the middle band before a break either way. I'm still leaning very much towards a bearish resolution here, but I may be mistaken. SPX daily chart:

Double-Top or Range?

The question here is whether SPX has formed a double top, or is just consolidating sideways in a range. A double-top would resolve down, and a consolidation would most likely resolve up. I have marked up the range option on the SPX 15min chart below and if we were to see another break over strong resistance in the 1874/5 area again then this would most likely be a range. I'm not expecting to see that, but if the spike into a marginal new high last week was a false break, then it should not really be retested. ES is just below that main resistance level now, so we'll see how that goes this morning. SPX 15min chart:

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The rising channel on SPX broke yesterday and I'm leaning towards the view now that the Spring high was made last Friday and that SPX has started the move to retest broken resistance at the 2000 and 2007 highs that I've been expecting to see this summer. Obviously the bears have dropped the ball a lot of times in the last few years, but I would expect this setup to resolve down. SPX broke back below the daily middle bollinger band yesterday and as long as that holds on a daily basis then the next target is the daily lower bollinger band in the 1837 area, currently just under smaller double-top support at 1839/40. SPX daily chart:

SPX Rising Channel Broken

Now that the SPX rising channel has been broken the next step is to break below the 1850 range floor that held yesterday and then break double-top support at 1839/40. that would open up the double-bottom target at 1795. The bounce yesterday stalled at the retest of broken channel support and the 50 hour MA. That resistance may hold today but we may bounce higher without weakening the overall topped or topping setup here. SPX 60min chart:

Read more...

SPX gapped up hard over 1874/5 resistance on Friday morning, and if that had held then that would have been a very bullish breakaway gap. Instead SPX made a very marginal new high before failing hard and filling the gap, and that was not at all bullish. If bears can follow through this week then there will be a very real possibility that the Spring high was made on Friday slightly earlier than usual.

To follow through the bears must break back below the 50 hour MA, currently at 1866, and the daily middle bollinger band, currently at 1861, and rising channel support, currently in the 1659 area. If they can do that then there is now a perfect double-top that would target the 1794/5 area on a break below the last low at 1839.57. That would be an almost perfect 61.8% fib retracement of the move up from the 1737 low, but there is also a much larger double-top in play that would target the 1592 area on a break below the 1737 low, and I'll be looking at that possibility today.

For now on the daily chart SPX is still holding above the middle bollinger band in the 1861 area, and if SPX breaks back below that then the obvious next targets would be the lower band, currently at 1837, and the 50 DMA, currently at 1832. Worth noting on this chart is that main primary rising channel support is now in the 1780 area. SPX daily chart:

A Modest Proposal

On the SPX 60min chart bulls really need to perform here to stay within the current rising channel. On a break below there is now a perfect double-top targeting 1795 on a break below 1839.57. If SPX was to overshoot and break the primary rising channel support trendline in the 1780 area then there is also a larger double-top in play targeting the 1592 area on a break below 1737. That would be very close to a 38.2% fib retracement of the move up from the October 2011 low at 1074. SPX 60min chart:

Read more...

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