Wedges turned Channels

Well somewhat to my surprise SPX bounced at my highest retracement target yesterday, and that was at the 50 DMA. The broken rising wedges on SPX and NDX both established rising channels at the low, and I posted the SPX channel on twitter later with the comment that there was no longer a retracement setup there unless the rising channel should break down. That remains the case this morning of course and I would add to that the note that the rising channel is rising at better than ten handles per day, so it is likely to break down within a few days at most. SPX 15min chart:

The setup on NDX is essentially the same, though NDX is already making new highs of course. NDX 15min chart:

The low yesterday was at the highest support level on SPX that I gave in the morning, which was the retest of the 50 DMA. For today I would point out that I have a possible falling channel resistance trendline marked on the daily chart and I have that marked in at the 1833-5 SPX level as far as I can make out. I have a bearish tilt coming into today which i'll expand on at the end of the post, so I'll be watching that area for possible reversal. SPX daily chart:

Gold has broken up through the 150 DMA which is excellent news and a strong signal that the bear market on gold and the precious metals complex generally may well be over. For confirmation gold will need to hold the 150 DMA as support, and I'll be waiting to see if gold can hold above it. if it can I'll be moving gold back onto my buy every dip list until further notice. Gold daily chart:

TNX is retesting the IHS neckline and this is a very nice looking long entry (long bond yields = short bonds) as rising support is not far under the trendline. This IHS setup will look a great deal less interesting if rising support should break, though it might still then play out. TNX 60min chart:

I haven't been posting the USD chart much lately as while I've been noting the strongly bullish nature of my USD forecasts that I have been seeing, I haven't shared that enthusiasm. USD has not yet so far shared that enthusiasm either, and looks as though it may be turning down to retest the lows. That retest would improve the current low considerably in my view and I think that we may well see that. At that 78.6 area test USD should then either bounce strongly into a new wave up, or break down hard to confirm that USD has been in a new downtrend since July 2013. USD has just failed at the 200 DMA twice and my feeling is that is because there is some unfinished business on the downside. If I'm right then Euro and GBP bears particularly should consider waiting until that unfinished business is concluded. USD daily chart:

Yesterday's trend day was an impressive show of strength, and we could see SPX run straight up to new highs from that retracement. However I would note two things that are potential issues in this scenario. The first is that with yesterday being a trend day, then the lean today, as it was on Wednesday, is towards consolidation or retracement. The second is that the stats for the trading days on either side of President's Day on Monday lean very bearish, with the trading day before down 17 times of the last 22 according to Stock Trader's Almanac. I mentioned yesterday morning that:

'I would add the caveat that at this stage in a rising wedge breakdown there is often ..... a test of the highs to establish the second high of a double-top. We could still see that happen here.'

That double-top setup is still in play here and if we were to see a break below the rising channel it would move up to be the most likely short term scenario. That breakdown and deeper retracement would obviously be a decent fit with the very bearish stats for today and Tuesday. As long as the rising channel on SPX lasts however, the uptrend is intact and uptrend support is rising at more than ten handles a day, so it's important not to be stuck on the wrong side of that.

I'm taking a week off trading next week but am still planning to get posts out on the mornings of Tuesday through Friday. Those posts may well be shorter than usual however. Everyone have a great weekend! :-)