I haven't much to add to my ES & SPX charts from yesterday here so I'm going to concentrate on other things today. Support is still at Monday's low and resistance is still at last Thursday's high so a break of either with any confidence should deliver the next significant move. I was asked yesterday whether in effect I was saying that a break higher should be followed by more upside, and that a break lower should be followed by more downside, and that is exactly what I'm saying here, and is a good description of any setup confined between strong support and resistance levels. Obviously we are a lot closer to resistance than support here at the moment.
Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Teasingly Ambiguous (by Springheel Jack)
It's often tempting to anthropomorphise the markets, whether describing the movements of the markets, or referring to the dark forces that some feel are manipulating the markets behind the scenes. I don't subscribe to the latter view, as I think that the force manipulating the markets is doing so quite openly, and that force is the Fed, helped by other central banks, keeping interest rates negative and flooding the world with new money in the expectation that rising asset prices will boost the real economy. I do sometimes anthropomorphise the market however, and this week the market is being a tease.
I mentioned yesterday morning that a break above my SPX declining channel would open the way to a test of the highs and that was what we got, to within three points. In terms of direction that resolved absolutely nothing, as the failure at the afternoon high on SPX was a lower high, a potential double-top, and a second test of declining resistance from the 2007 high. Here's the updated big picture SPX daily 6yr chart:
Looks Corrective (by Springheel Jack)
SPX has closed down for four days running now without actually moving down much. That might be a topping process of course, but this looks like a corrective move before a new wave up, which supports the contention of many EWers that this is a wave 4 retracement. That being the likely case, has this retracement already ended? Well we made a higher low yesterday, and on ES we've seen a (short term) higher high overnight, but looking at bonds and EURUSD I'm still leaning short, and SPX has not yet hit the obvious target at rising support from November, though it might not get there of course.
Short term on SPX I'm watching a new declining channel. Resistance is in the 1317.5 area so ES is going to have to drop somewhat from the current area near the overnight lows to stay below it. As long as SPX opens below there the current downtrend is intact. If that channel breaks then the path is open to a test of the highs and perhaps much higher. If the channel holds then the blue trendline within the rising channel is rising support from Monday's low, and on a break of that trendline a possible move to channel support in the 1290 SPX area opens up:
Retracement, Interrupted? (by Springheel Jack)
A very annoying feature of this move up since the December 19th low is that the retracements have been shallow and, mainly in consequence, no strong support trendlines have formed. This was looking very good to be the first decent retracement this year, with a clear target trendline in the 1275-85 SPX area (depending when it was reached) combined with a pullback on EURUSD that also looks overdue.
I posted an ES chart on twitter last night that showed the ideal setup there and that was on the 15min chart below:
Cautiously Bearish (by Springheel Jack)
This retracement on equities isn't breaking any speed records so far, and probably won't. However it looks encouraging and I thinks there's a decent chance that it will reach rising support from the November low, which would be in the 1275 SPX area today. On the SPX 60min chart that would confirm the lower trendline of a rising wedge and deliver an upside target range after the bounce at wedge resistance, which would be very nice to have:
