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Yesterday was day three of the current ride on the daily upper band. These rides are where there is a strong trend in either direction using either the daily upper or lower band as the anchor for the daily candles. Yesterday was a decent example, closing within 0.20 points of the daily upper band.

These band rides vary widely in length, it isn't uncommon to end after three or four days and they can extend to seven or eight. The last two band rides on this chart lasted nine and five days respectively. SPX daily chart:

Daily Band Rides

The obvious next target on the SPX chart is rising wedge resistance in the 1930 area. If the daily upper band ride continues then that could be reached on Mon/Tues next week, or tomorrow on a very strong push. Key uptrend support is the breakaway gap from last Friday's close at 1900.53. That should not fill until SPX has finished the current move so if the gap should fill the current uptrend might well have topped out. I am concerned about the negative divergence on the 60min RSI. SPX 60min chart:

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Yesterday was the second day of the current ride up on the daily upper band, and SPX closed the day six points above the band. That most likely limits upside today somewhat but 1920 would still be in range. I'm not expecting this band ride to end yet but if it does then middle band support is in the 1885 area. SPX daily chart:

Breakaway Targets

SPX gapped above the megaphone upper trendline that was resistance on Thursday and Friday, and the megaphone target is in the 1940 area. There is a slight issue with that, in that in order to reach that target within the current overall rising wedge, then that wouldn't be able to happen until the end of June, which seems rather too far away. The megaphone may fail to reach target but for the moment I am assuming that there will be a bearish overthrow and have marked up the chart accordingly. SPX 60min charts:

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Today we should get the answer to the question where SPX is breaking up towards the next upside targets, or will fail at the retest of the 1902 high. early indications favor the bulls so far and I'll be watching this rising megaphone that I posted on Thursday night to see whether it breaks up, very possibly at the open. If it does, and the gap doesn't fill, then that should be a bullish breakaway gap. SPX 15min chart:

Moment of Truth

If SPX does break up then I'll be looking for a hit of rising wedge resistance on the 60min chart. I have that in the 1935 area at the moment,. and rising of course. SPX 60min chart:

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I'm a reversals specialist, and on a multi-timeframe basis I chart trendline, pattern and RSI reversal setups that work well. I'm good at what I do. However on an intraday basis the first question of the day is always whether it might be a trend day. On a trend day all reversal setups become worthless, bearish patterns deliver tiny declines if they deliver at all, every counter-trend reversal setup, however good on other days, stops working, and there will generally be no setups in the direction of the trend because the retracements are too small to form them. That is the power of a strong trend.

On larger timescales these trends can last months or even years, and while in the grip of these strong impulse waves my smaller reversal setups and intraday reversal setups work just fine, as they are too small relative to the trend to be strongly affected. However I then get the same problem with my daily, 60min and 15min charts as I get with my intraday charts on trend days. Time after time very nice reversal setups will setup and the trend steamroller will squash them flat. A strong impulse wave up will roll straight over anything in its path until it ends, and must be respected.

So what's my point? Well we are now at a crossroads on SPX, and other indices as well of course. I called the highs yesterday on twitter with a very nice little rising wedge that broke down in the afternoon and you can see that wedge in thin lines on my SPX 15min  chart below. The chart covers the last month as SPX has chopped around in the current range and you can see nice clear patterns, and a string of RSI 14 divergences that formed and marked the start of significant reversals. If we are still trading that range, and are not in a new impulse wave upwards, then the short term high was made yesterday, or might be slightly exceeded today before a decline that should take SPX to rising megaphone support, currently in the 1872.5 area but obviously rising. You can see that I have marked in the last six 15min RSI divergences from overbought/sold and all six made the target at the 30 or 70 level on RSI respectively. If we are not in a new impulse trend up then I would expect this reversal to do the same.

If we are in a new impulse trend up then this powerful reversal setup will be bulldozed, and making a sustained new high will confirm the break up from the range. If we do see a break up then the alternate scenario I showed yesterday will become my primary scenario. We reached the point of decision yesterday afternoon, and now we will see what happens there. SPX 15min chart:

Push Up or Shut Up

On the 60min chart the 50 hour MA is now at 1882, and bulls need to hold that while bears need to break down through it towards the test of broadening wedge support. I was asked why the 50 hour MA is important, and the answer is that an impulse move will generally break over the 50 hour MA and then hold it as support until near the end of that move. If we see a decent break back below it now then the chances that we are in a new impulse wave up drop dramatically, and in that case we would very possibly be in a new impulse wave down, in which case the 50 hour MA would be important resistance. SPX 60min chart:

Push Up or Shut Up

On the daily chart SPX came close to testing the upper band yesterday, and that is now at 1899. Given the strong reversal setup at the high yesterday a hit of 1899 now might well be a break upwards. If we see that test I'd give even odds that would be the start of a band ride upwards. SPX daily chart:

Push Up or Shut Up

I was being chided yesterday for ignoring the obvious break up on NDX, but as ever I'm seeing the setup here differently to most. On my NDX chart we are seeing what is either a bullish break upwards from a rising wedge that will most likely evolve into a rising channel if that break is sustained, or a bearish wedge overthrow that on a break back below broken wedge resistance would be looking for a test of the April low at 3414. That would complete the huge H&S that has been forming on NDX over the last few months, and might therefore just be the first half of a longer journey south. I'm watching this setup with great interest but it isn't a compelling long yet in my view. NDX 60min chart:

Push Up or Shut Up

This is a very important inflection point and what happens here should set direction for weeks on a break up, or months on a break down. This could go either way though the bull case here is helped by the holiday weekend, as these low vol periods around them tend to favor the bulls in my experience.

Source: Springheel Jack

Bulls beat the stats and repaired a lot of damage yesterday, closing with a clear break above the 50 hour MA. If that turns into support then the path is clear fora retest of the highs. If SPX makes a new high with any confidence then the next upside target would be rising wedge resistance in the 1930-40 area. SPX 60min chart:

Only Uncertainty is Certain

How would a 1930-40 target fit with the SPX weekly chart? Reasonably, rising channel resistance from the 2011 low has already been tested twice without a return to test channel support, but while a third test is rarer, it is far from unknown. Primary rising channel resistance is also currently in the 1930-40 area and is rising at about 15 points per month. SPX weekly chart:

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I was saying yesterday morning that the bears needed a fast and hard rejection at the SPX 50 hour MA, and that's exactly what we saw. That was a serious bull fail, but they could still repair the damage by breaking back over the 50 hour MA with confidence, and that closed at 1883.30 yesterday. SPX 60min chart:

Significant Bull Fail

On the daily chart SPX broke back down below the middle band, which was bearish. The last two times that there was a candle setup like the last two days (first day break through band with confidence, second day strong rejection and break back through the middle band with confidence), the rejection followed through hard on the third day in the direction of the rejection. That leans bearish today and the bears have another shot at breaking support in the 1850-60 zone at double top support at 1859, rising support from 1737 in the 1855 area, and the late April low at 1850. SPX daily chart:

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SPX broke back over the daily middle band yesterday, and bears need a swift reversal or the next obvious target will be a test of the daily upper band, now at 1896.5. SPX daily chart:

Bear Necessities

That wasn't main resistance here however. What I've been looking at for that is the SPX 50 hour MA, which was broken slightly at the close yesterday with the close two points above it. If bulls can follow through and turn the 50 hour MA into support, the next obvious target will be a retest of the high, and on a conviction break above that, a test of rising wedge resistance, currently in the 1930 area.

Bears need a swift reversal here to start the next leg down. A break below the 1859 low and then the 1850 low will open up the downside. SPX 60min chart:

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For the second week the weekly candlestick on SPX was a long legged doji. These are indecision candlesticks, but don't give any clues to direction as the breakout direction is random. If we see a break up then the weekly upper band is currently at 1903.6, close to a retest of the current high, and on a break down the middle band is currently at 1845, slightly under rising support from the 1737 low. SPX weekly chart:

Middle Band Retest

On the SPX daily chart the rally on Friday afternoon retested the daily middle band, and the close just just underneath it. A break with a daily close more than 4 points back above the middle band would be bullish. Worth noting here is the now very narrow daily bands, which is telling us the we are likely to see a move start shortly that will hit an outside band and then rise the band in a powerful; move for several days. The last similar pinch was in January and was resolved in the fast move down into the 1737 low. SPX daily chart:

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The decline yesterday was dramatic, but not sufficiently dramatic in my view that we should now assume that the spring high was made on Tuesday. Bears will need to follow through and close below 1850 SPX before that assumption can reasonably be made.
I'm just looking at SPX and bonds today but I will just mention that the low on RUT yesterday was at 1082.53, still in the lower range I gave yesterday morning for a possible bullish recovery, and that NDX didn't break rising support from 3414, though it came very close to testing it. There is a strong argument that this decline has limited the scope for further upside however, and if we should see a strong recovery from yesterday's lows then I would mention that something often seen at significant highs is a sharp spike down before the main slightly higher high. This is a common way to set up a double top.

On the SPX 60min chart the 50 hour MA was broken yesterday morning and then the breakaway gap at 1878-80 was filled. That kills off the idea that a new impulse move upwards had started with that level as the breakaway level for the move. The next level of support is the last low at 1859.79, and then rising support from 1737 in the 1850 area, which is now key uptrend support. If we see a bounce today I would put my bull/bear level at 1878-82, as that would be the retest level for broken rising support from 1814, and also the likely range to break back over the 50 hour MA, which closed at 1882.70 yesterday and is currently declining. SPX 60min chart:

The Great Brain Robbery

No real damage has been done on the daily chart as yet. The daily middle bollinger band was broken, but that isn't bearish because SPX followed through to test the daily lower band. The low was two points higher than the lower band and I would score that as a technical hit. There was a pinocchio below the 50 DMA, but SPX recovered back above it before the close, and you can see from the chart below that  there were similar pinocchio/recovery candles at both the 1850 and 1859 lows, both of which were followed by strong rallies to higher highs. As long as SPX neither opens nor closes significantly under the 50 DMA it is still unbroken support. SPX daily chart:

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SPX held the SPX 1min rising channel for a while yesterday, but then it broke and we have been seeing a more substantial retracement. Could the Spring high now be in? Yes, but we're really going to need to see some more evidence before assuming that, and that's what I'll be looking at today. 
 
There's not much to say on the NDX chart other than to reiterate that a failure at this week's high would be an ideal right shoulder high on the very large H&S that has been forming there. I'll therefore start with RUT where RUT is now back within the falling channel that broke up on Monday. That situation isn't at panic stations yet and a low near yesterday's close in the 1100 area would be an ideal right shoulder low on a possible IHS, and a  low in the 1080-90 would make a possible second low on a possible larger double-bottom. Under there the bullish options get much thinner, but until then the bullish scenario is still in play. RUT 60min chart:
Who Knew?
On SPX I've been saying since the break up on Monday that the breakaway gap at 1878.48 SPX needs to remain intact until the breakaway move is complete. That is therefore very important support today and if that gap is filled that will look pretty bearish. If that is filled then I have rising support from 1814 in the 1873-5 area, and rising support from 1737 in the 1850 area. If 1850 is broken then then next target on the road to 1570 will be double-top support at 1814. SPX 60min chart:
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