One Step Beyond

I'm on vacation in very rural southern England this week. The weather is pretty good (for the UK) and the scenery is lovely. The internet connection is rather slow and strongly reminiscent of the mid-90s, but I have enough connectivity to do a short post today.

Obviously there hasn't been much progress to the downside in the last few days, but there are still some very promising short term topping patterns on multiple US equity indices and SPX has not yet reached the obvious retracement targets after the recent rising wedge break. Those targets from the daily chart are the daily middle bollinger band at 1667 or the 50 DMA at 1645. Having moved as far from the daily upper bollinger band as SPX has, I would normally expect a hit of one or the other. SPX daily chart:

On the SPX 60min chart there is a decent looking H&S forming after the rising wedge break. If it breaks down the target would be in the 1650 area, which would be a good fit with the 38.2% fib retracement target at 1646. SPX 60min chart:

I've mentioned before that I'm working up the stats on a new trendline reversal setup called the DTR or double-tap trendline reversal. That's where a trendline runs from a high through the most important rally high and the last touch is a retest of the trendline after breaking up.So far this seems to be a very reliable signal for trend reversal and I have one of these on silver at the last low. I'm watching for a break above current declining channel resistance to confirm, but there is now a very good chance in my view that a major low is in on silver, and by extension on all of the precious metals. I am still a longer term bull on precious metals so this is a very attractive looking buying opportunity to my eyes:

I have another DTR on TLT on the last retracement, though not quite as perfect as the one on silver. I am still leaning strongly bullish on bonds over the next few months unless TLT breaks strong support in the 105/6 area:

It's easy for SPX to drift up in low volume conditions but much harder for SPX to fall. I'm still leaning short for the moment and if we are to see more downside I would expect the H&S on SPX to break down in the next day or two. Alternatively we might see the high tested to form the second high of a double-top. If we do that however there is an obvious danger that SPX will just keep on going upwards. The 50 hour MA on ES is at 1682 and held as support overnight. While ES holds above there the bulls have an edge.