Some bouncy action at the open this morning but not so much on RUT. The next obvious target on RUT is at wedge support, and RUT looks likely to hit that today. What happens there we’ll have to see. RUT 60min chart:
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Canary In A Coal Mine
I posted the RUT 60min chart on Friday morning showing RUT testing a decent looking rising wedge resistance trendline and obviously expecting that to hold. If you were just watching SPX and NDX over the rest of the day you might well have assumed that the RUT wedge resistance was demolished by the bulls, but actually it held, and anyone shorting RUT from the Friday morning high had a pleasant if unexciting day.
What does this mean? Well firstly it’s a reinforcement of something I mention regularly, in that correlations are hit and miss for trading purposes. If I think USD is headed higher I won’t short GC, as the inverse correlation might fail even if I’m right about USD. I would always go long USD & cut out the middleman. That’s why I didn’t short ES on Friday because TF was hitting serious resistance, I shorted TF & had a pleasant day.
Show and Tell
This has been a very impressive move upwards, particularly on RUT/TF, and I’ve heard a lot of talk that resistance is now irrelevant and that equity indices can now head to the moon without restraint.
As it happens there is an opportunity to test that theory today, and I’m watching what happens here on RUT with great interest & I’m showing why on the third and last charts below.
60min sell signals have fixed on all of ES, TF and RUT here, and ES is in a decent rising channel. The next obvious move is to channel support, currently in the 2229 area. ES Dec 60min chart:
Looking For Retracement Here
Yesterday was a an unexpected trend day. Usually trend days arrive on Stan’s cycle trend days but not always and yesterday was one of those exceptions. The double bottom targets that I gave on Monday morning for ES, NQ & TF have now all been made, and obviously this move is developing faster than I was expecting. This increases the odds of making the next significant high in mid to late December rather than January.
The trend day yesterday clarified the pattern setup here nicely on NQ & TF. Less so on ES, but that too is likely setting up for some retracement here. The obvious target would be rising support, currently in the 2218 area. ES Dec 60min chart:
Hesitation Marks
NQ is still someway short of the double bottom target at 4815, but ES has now come (twice) within three ticks of the target full retest of the all time high, and should make that target shortly. ES Dec 60min chart:
