Smelling Salts for Bears

What a difference a day can make. ES hasn't actually fallen much, and no major technical damage has been done yet, but there are real signs now that we may be seeing a significant interim top here, and I'm thinking that now looks likely.

On the SPX 60min chart the smaller channel is holding and we saw a test of broken resistance at 1150 SPX which has held so far:

The big news for me was elsewhere though, as we saw promising reversals in silver and USD particularly. In terms of USD a bounce here would leave unfinished business for later in my view, as I'd expect a test of key rising support, currently in the 75.75 area. However the close yesterday was at the 76.4% fib retracement of the November to June USD rally, and is also a significant support / resistance level. A bounce here is credible, and EURUSD and GBPUSD are turning at 1.40 and 1.60 respectively, which are significant levels:

The Silver reversal was very encouraging for the bear side though. I was not feeling good about a silver reversal as I was writing yesterday's post, as silver was making a significant move through the upper trendline of the two year rising channel, but that reversed sharply and we saw a move most of the way back to the short term rising support trendline. We need a break of that trendline really, but if we see that then silver should have made a major interim top:

Silver's important because of the gold:silver ratio, which is an important bull/bear indicator. When silver outperforms gold then equities tend to go up and vice-versa. If silver has made a major interim top then it should underperform gold for a while, and that should be accompanied by a retracement on equities. Here's the gold:silver ratio on the 30min chart. You can see that declining resistance has been touched, but not yet broken:

Looking at other indices the Nasdaq particularly looks promising for an interim top here. The rising channel (sort of) from the August low broke some days ago and Nasdaq has been underperforming SPX. A nice declining resistance trendline has formed which I'd expect to see hold if we are making an interim top here:

The unemployment figures coming out this morning may be the trigger needed to push equities down. The speculation is that the US jobless rate has increased for a second month in a row, as that's being reported on Bloomberg as likely. If we are making an interim top here I'm expecting the retracement to last a couple of weeks and to target the 1085 - 1115 SPX area. There's a chance that it could go further, and hit the rising support trendline in the 1070 SPX area shown in the first chart, but I'm not expecting to see that really.