Losing Momentum

That was a very nice looking H&S setup on SPX and ES on Friday morning, but the serious doubts I expressed about it then proved to be very well founded. SPX closed another week at the upper weekly bollinger band, and as I mentioned last Monday, this is rising at about ten points per week, so if we see the same again next week the target area would be 1522/3 on SPX:

On the daily chart SPX closed three handles below the daily upper BB, which I count as a hit, so SPX beat the odds to hit this again before a retracement into the middle bollinger band. All four instances on the 20 month daily chart where this happened previously were during the strong impulse move up October 2011 to April 2012. Worth noting on this chart is that SPX is now testing rising wedge resistance from July 2011:

On the 60min chart the negative RSI divergence is now weakened by the move below 50 on the RSI 14, and we still have a possible H&S forming, with the move up on Friday establishing the head. Strong support and the possible H&S neckline at 1496 SPX:

This setup is mirrored on ES, where strong support and the possible H&S neckline at at 1491. ES has currently broken below both the 50 and 100 HMAs but is still above the 200 HMA at 1496. I'm not expecting a break below 1491 here, but a touch and reversal there would look promising for a decent retracement soon:

DX has completed the large H&S that has been forming there over the past few months, but is bouncing off the H&S neckline at the moment. Most likely this is just a rally before this pattern breaks down:

EURUSD and CL are both leaning bearish today. On EURUSD an M top has broken down with a target at broken resistance in the 1.35 area:

CL has formed a very nice looking double-top and since I capped the chart below that has broken down. The target is strong support and the possible H&S neckline in the 95 area:

There's a lot pointing down today and I think that we may well see a test of 1491 today as part of an H&S forming on ES and SPX. A conviction break below 1491 would trigger an M top target in the 1471.5 area. SPX daily middle bollinger band support is now at 1484.