Breaking Glass

SPX made the targets I gave on Friday morning and on the SPX daily chart the highest target was a test from below of the daily middle bollinger band. That is a natural resistance level and the question this morning is whether equities go higher. SPX daily chart:

Looking across the indices there were quite a number of decent patterns and declining resistance trendlines from the high, and most of those were broken on Friday. I mentioned the possibility on Friday morning of IHS patterns forming on SPX and TRAN, and those are still in play this morning, though we haven't yet see the drop below 1634.50 ES that would suggest that this pattern will form on SPX. On the SPX 15min chart I posted a chart on twitter after the close on Friday showing the path the right shoulder for that pattern might take on SPX. SPX 15min chart:

How's that looking on ES overnight? Looking OK so far. The only decent candidate for an IHS neckline on ES is in the 1645 area and that is being tested now. we may not see a breakdown here but the rising wedge from the low, the negative 60min RSI divergence and the overnight crawl up the support trendline are all suggesting retracement fairly soon. I say retracement because a clear declining channel was established on ES overnight, and that has then broken up, which suggests more upside soon regardless of what happens today. ES 60min chart:

The other good candidate for an IHS to form that I mentioned on Friday morning is on TRAN. The little double-bottom I showed then made target and TRAN went on to test and has pinocchioed the 6350 possible neckline level that I gave as the main upside target. If we see weakness today, as with SPX, the obvious retracement is to form the right shoulder for this pattern. As with SPX, TRAN has broken declining (in this case channel) resistance and regardless of what we see today I'm expecting more upside later. TRAN 60min chart:

There was another declining channel on Dow, and that broke up and retested late Friday afternoon. INDU 60min chart:

A good quality falling wedge formed on RUT from the highs and that broke up very late on Friday afternoon:

NDX stands out from the pack this morning in that it is the only one of the indices I have shown today that hasn't yet broken up. Wedge resistance is slightly under 3000 and there is a good example of a rising wedge that broke up that is well worth a look on this chart, as I'll be talking more about these later this week. NDX 60min chart:

Nothing much has happened on USD over the last day and it is still holding the key 81.5 support level but CL is looking more interesting, with a move within a buck of key resistance in the 97.4 area. If we see CL make it to 97.5 then that should signal that the overall trend has moved from down to up:

I'm leaning somewhat short this morning, as equities need a small retracement and I like the setup for an IHS on ES. It may not happen that way but if so we should still see some retracement or consolidation soon. Either way I'm expecting higher prices soon though overall upside is limited by resistance on the SPX broadening wedge. I'm not expecting another really big move up before that wedge breaks down and we make a more definite summer low.

I have failed again to get my weekend post out on secular bear markets, though I have completed all the charts and drawn my conclusions from those. I'm going to write this up to post just after the close on Friday this week, but the takeaways to mention now are that at least some more significant upside is likely on equities, that the secular bear market has not yet finished on either Dow or TRAN, and that it is also very possibly still ongoing on SPX, though the first of two secular bear market patterns on SPX broke up at the end of April. I think everyone will find the finished result interesting, and hopefully that will have been worth the wait. :-)