What an amazing move up this has been. Over 150 points up from the lows on SPX without a meaningful pullback which is a very strong move indeed. Obviously there will need to be some meaningful pullback soon, but in the short term there's still some room for SPX to move up further. SPX and RUT are close to the upper bollinger band on the daily charts and NDX has already reached it. The SPX upper bollinger band is at 1232.37 today and that is an obvious target, close to the late August high at 1230.71:
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.
Unexpected IHS (by Springheel Jack)
I'm not a Jim Cramer fan I have to say, but even Jim Cramer can say something sensible once in a while and I saw a great quote from him while browsing yesterday. It's a good attitude to take and worth remembering, even if he hasn't said much else worth repeating. Markets are all about setups and probabilities.
'Remember, I am neither a bear nor a bull, I am an agnostic opportunist. I want to make money short- and long-term. I want to find good situations and exploit them.'
I was looking for an H&S pattern to form yesterday and one did, albeit not facing the way that I was expecting, as a very nice looking IHS formed on ES in the last 24 hours or so. The retracement into it was shallow, and it's therefore a bit marginal in my view as a reversal IHS, but it might play out, and is worth bearing in mind today. The target is just under 1220 ES. There is therefore a very significant chance that we will see the last high retested or a new high made today:
Interim Top (by Springheel Jack)
Most likely equities made a significant interim top yesterday. How significant? Hard to say & we'll have to watch the retracement for clues as to what happens next. The level of the wave top was ambiguous to say the least, and though some bulls were throwing parties to celebrate the start of a new bull market, the strength of the wave up, and the levels of the highs yesterday on SPX and EURUSD particularly were making a case that could be read as extremely bearish. Kudos to Pug by the way for calling 1219 as his extended wave target last week.
In terms of the high on SPX, I posted the monthly chart yesterday and mentioned that in each of the last two bear markets, after the initial close below the monthly 20 SMA, that MA had been retested once subsequently in each bear market and held until the bear market bottomed out. That monthly 20 SMA was at 1209 yesterday and SPX closed at 1207. Holding so far then. The high was also an almost perfect 50% fibonacci retracement of the move since the wave 2 high at 1356.48 (50% retrace 1215.61) and of the whole bear market (50% retrace 1222.67).
Thinning Air, Declining Volume (by Springheel Jack)
Well so far this rally up from the lows just won't roll over. As and when it does the higher highs on SPX and NDX yesterday are suggesting that equities will then make a higher low and move higher. I've marked the next resistance levels in the 1204/5, 1220 and 1230 areas on the daily chart. What's also worth noting is the declining volume as equities have rallied from the lows:
The other resistance level of significance that SPX is very close to (from the ES overnight) is the monthly 20 SMA at 1209. This is worth watching as once there was a monthly close below that trendline in the last two bear markets this MA was only retested once each time (and held each time) before the next bull market began and broke back up through it:
The futures have been very strong overnight, though they're retracing some overnight gains at the moment. All of them look overbought and extended here. ES broke up through 1200 overnight:
NQ broke up through 2300 overnight:
TF tested the last swing high (and potential IHS neckline). TF has been relatively weak as ES and NQ broke the last swing high earlier this week:
EURUSD broke up overnight after the Slovaks voted no to the EFSF expansion last night. Votes are a funny thing in Europe though, as only yes votes carry real weight. With no votes the Europeans just tend to vote again and again until they get the answer they want. No date has been scheduled for the next vote but there's some talk of another vote on Friday. No doubt the Slovaks will be thrown a bone or two for voting yes in due course, though what hasn't excited much comment is that even the expanded EFSF falls some way short of an adequate size.
On 30yr treasuries the 138'21 support level and potential neckline is being retested. If it breaks we'll probably see a run to the next support shelf at 135 and if that were to happen equities would most likely rise as treasuries fell:
I think that's unlikely though, equities are overbought on the 60min charts, the trendline setup looks weak, and reversal for retracement looks likely sooner rather than later. There's a full moon today and a Bradley turn date, both of which suggest that we should be watching for reversal here. The Gap Guy likes the odds for a gap fill today.
Steve Jobs Dies at 56 (by Springheel Jack)
I won't talk much about Steve Jobs today, because there's nothing I would say that Tim Knight won't say more eloquently and more knowledgeably. Jobs was a giant however, and arguably the Thomas Edison of the modern Age. His contribution to the development of the user-friendly personal computer was immense, and his impact on the music, film and home electronics industries particularly was also huge. The world is a poorer place after his tragically early death at only 56 and our thoughts should go to his family at this very difficult time for them.
