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That wasn’t a particularly satisfactory way to close the week on SPX, with a retracement still likely coming shortly but the action on Friday making a serious mess of the setups I was looking at in the morning.
The clearest charts here are Dow, TRAN and RUT. I’d generally exclude TRAN because it is often at odds with all other indices. Scan 3x 15min SPX INDU TRAN charts:
Now that we’re getting a hearty rally, a new opportunity may be revealing itself by way of the emerging markets fund, shown below. There’s a gap at 37.56, which also corresponds nicely with a broken supporting trendline. The closer we get to that price level, the more appealing the risk/reward ratio is.
After the Shanghai Composite’s July 9 low, the Chinese government enjoyed some brief success, managing to goose the index from 3587 to 4185, or by nearly 17% — until today, that is. The index melted down nearly 9%, closing on the lows, and has the right look of the initiation of a new down-leg within the still-dominant near-term downtrend.
Meanwhile, the S&P 500 remains within its 6-month sideways range, although the price structure once again is approaching a test of key support in and around its up-sloping 200-Day EMA, now at 2060/56. That level must contain any forthcoming weakness to avert a press to 2010-1980 thereafter–within an increasingly-toppy medium-term pattern.
Originally published on MPTrader.com.
