There is always a conflict when you see short term patterns for during trading hours on both an index and its 24 hour futures equivalent. An H&S pattern completed the head on SPX and ES yesterday, and there was a clear short term double bottom on both at the lows yesterday. On ES overnight that double-bottom has played out to target, and the H&S is now largely formed. Where does that leave these patterns on SPX? It may be that we will see that right shoulder bounce on SPX this morning, as a sort of echo of the overnight ES move, but for the moment I would treat the ES move as completion of that double bottom, and disregard the setup on SPX. We'll see how that develops this morning.
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Retracement Targets and EURUSD Patterns (by Springheel Jack)
Overnight we got the lower low on ES and the break below 1393.5 that I was looking for yesterday morning, on a string of bad overnight data releases. On ES this looks like something I have seen before, which is a break from a steep uptrend channel into a shallow rising channel, then a break into a shallow declining channel, and next in the process would be a break into a steep declining channel as the retracement gathers pace. Broken support is at 1393.5-5 and I'd like to see that hold. Declining resistance is at 1398.25 and falling fast. In an ideal world we would see a move to the potential neckline at 1384 today, then a bounce to the 1393.5-5 area to make a right shoulder and touch (by then lower) declining resistance, then a strong move down to the next support level around 1370:
Bonds Finally Moving in the Right Direction
Here's the game plan:
Short Term Retracement Setup (by Springheel Jack)
I had mixed feelings about the action yesterday and overnight from a directional perspective. On the bull side the early low and grind up yesterday was a classic strong uptrend day and NDX recovered from the gap down to make a new high. On the bear side ES delivered a lower low, the down gap on SPX didn't fill yesterday, and we saw a perfect test of broken ES rising support overnight without a higher high there as yet. Overall I'm cautiously bearish today as long as we don't see a new high on SPX.
A Load of Bull (by Springheel Jack)
I was hearing a lot of comments yesterday about how the current bull move is unstoppable on every timeframe, and that we could only see a pullback when every last bear had capitulated. What garbage. Nothing goes up in a straight line, and every trend has pullbacks. They may be shallow but we will see them. It may well be that those pullbacks will just be deeper dip buying opportunities but they will come. I don't see much to suggest that a major top is near here, and I'm leaning bullish into May, but there are always some bumps in the road. As far as I'm aware there are also no recorded historical instances of every single bear capitulating on any bull run in a free market, so I would advise against anyone holding their breath waiting for that here.
