Keeping It Short

Just a short post this morning as the main event is the setup on SPX which could break hard either way today.

Yesterday morning I said that I'd be looking for a test of the lows if the falling channel broke on the SPX 5min chart. It held and SPX made a marginal new low before bouncing to break that falling channel. There is now a very nice looking possible double-bottom in place on SPX that would target the 1780 area on a clear and sustained break over 1759. SPX 5min chart:

We'll see this morning whether this can play out. If not then we will most likely break down hard instead as my target at the SPX 200 day MA will be in range on a move down today and tomorrow. SPX has now ridden the daily lower bollinger band down for ten days, during which time the lower band has at least been touched every day either as support or resistance. The lower band closed yesterday at 1739, and if we break down again could close in the 1729 area today. We have seen that on moves down SPX can trade as much as twenty points under the lower band so the 200 DMA is now just in range at 1709:

If we are going up today then ideally we would gap up and go. At the least we should not retest yesterday's low and touch the daily lower band which would mean that SPX is still riding the lower band down.

If we are going down today then I have a short term possible double-top established on ES, which would target yesterdays lows on a break under 1744 ES, so anything under 1742 ES or 1747 SPX will strongly suggest that we have more downside coming. A strong hourly close under the ES 50 hour MA at 1745 would be decent bear confirmation, as ES broke over that yesterday and it has been holding as support since then. A break either way today should be respected.

One last note is that if we break up today then I would be expecting this to be a rally with another strong move down coming afterwards. A hit of the 200 DMA on the other hand would be a decent candidate for a main retracement low. Be careful out in the woods today! :-)