Jack Chappell aka Springheel Jack - A Classical Trendline Chartist's View of Equities, Bonds, Forex and Commodities
- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE - This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.
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I'm doing a morning post today as I'm hoping to take most of the afternoon off after a big webinar at lunchtime. Starting the weekend early. :-)
ES/SPX broke back over the daily middle band yesterday and needs to confirm the break above with another close above today. That's is currently in the 2655 area on both ES and SPX and is clear support. If we were to see a rejection back under there today then we might well see most or all of yesterday's daily candle retraced, as that is seen very frequently on a middle band break and non-confirmation.
So the daily middle band is clear support today. Clear resistance is at the ES monthly and weekly pivots at 2678.75 and 2683.25. The high on ES yesterday was .at the monthly pivot test and if ES is going to fail there we would ideally see yesterday's high tested this morning to establish negative RSI divergence, then a hard fail.
IF ES breaks over both monthly and weekly pivots and converts them to support, then that opens a possible test of last week's high at 2718/9. ES Jun 60min chart:
SPX broke back under the daily middle band on SPX on Tuesday, and confirmed the break below at the close yesterday. If SPX breaks back above the daily middle band today, as seems likely at the time of writing, then that will need a confirming close back above tomorrow.
I posted the key declining resistance levels on SPX and ES on my twitter this morning and they were in the 2662 and 2670 areas respectively. The break above today opens a possible retest of last week's highs and maybe higher.
Full Intraday Video from theartofchart.net - Update on ES, NQ and TF (at the start) and then DX, CL, NG, GC, ZB, HG, KC, SB, CC, ZW, EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD and NZDUSD:
There is still a decent amount of resistance to be negotiated above, but in the event that SPX rallies back over 2700, the obvious expectation would be a retest of last week's high, and very possibly a test of the triangle resistance that wasn't reached last week. That resistance is now in the 2728 area. If seen that wouldn't be likely to be the second high of a double top, and the retracement between the highs retraced more than 61.8% of the previous move. That would be the next key resistance area however, and a break above it could open a retest of the all time high, though that would be unexpectedly early. SPX 60min chart:
Stan and I are doing a free public webinar 30 minutes after the close tonight entitled 'Turn Around Your Trading Part 3' on turning TA into profitable trades. If you'd like to attend you can register for that on our April Free Webinars page. Stan and Suz will be following that with another webinar on option premium capture, and registration for that is on the same page.
I've mentioned a couple of times in the last few months that we are developing a new options service doing directional trades based on the futures and forex instruments that we cover. We are planning to launch that in June and are now in the pre-launch period. Weekly posts will be done on our blog about that every week and if you're interested you can see the introduction post for that here.
There is a very strong rally setup coming into today, so I've decided to do an AM post this time, with the video below being the section on indices from my premarket video this morning.
The rally setup is the breaks up from bull flags on SPX, NDX and RUT yesterday afternoon and this morning, and the double bottom on SPX that needs to break and convert double bottom resistance at 2683 to fix a double bottom target in the 2705-8 area. If that delivers then all three have a decent shot at a retest of last week's rally highs. Premarket Video from theartofchart.net - Update on ES, NQ and TF:
The best setup, as happens regularly, is on RUT, with the low yesterday at rising support from the early April low, and a beautiful bull flag falling wedge that broke up at the open today. RUT 60min chart:
This is a nice setup but, if it fails, SPX will likely retest yesterday's low and may well then continue considerably lower. Bulls really need to deliver this morning if they want that retest as a fail could be ugly. Rising wedge support on RUT is in the 1557 area, and if that breaks this rally setup is likely broken too.
Well SPX has finally retraced over the last couple of days, and the bull/bear line that I'm talking about on the video is rising support from the April low. That was tested as expected not long after I recorded the video and that's holding so far. On a break below this rally has likely ended unexpectedly early. If it holds then SPX should do another leg up into the 2730s and triangle resistance there. I'm leaning towards another leg up unless that trendline support breaks. We shall see. Intraday Video from theartofchart.net - Update on ES, NQ and TF:
Here's the overall triangle setup on SPX. SPX 60min chart:
I was saying last week that a fill of the open gap from 2711.93, I'd be disregarding the Three Day Rule target (a retest of 2553.80). The Three Day Rule target technically hasn't failed yet, but the first downside scenario is likely failing, and we are now left with the remaining two scenarios.
The secondary scenario is that a large triangle is forming here, and that SPX is heading towards triangle resistance, currently in the 2745 area. As triangles are to an extent a 'Get Out Of Jail Free' card for pattern targets, on a fail there we would likely still reach the Three Day Rule target, and I'd add this to the other two exceptions when the rule triggered while a triangle was forming.
If we do see this scenario develop then as SPX moves to triangle resistance NDX and RUT may reach their IHS targets in the 6945 and 1608 areas respectively.
If SPX breaks over triangle resistance then the Three Day Rule has had the first fail, and SPX would likely reach that IHS target in the 2792 area. At that point I'd be fairly neutral on direction, though excepting at least a retracement sometime soon.
Full Intraday Video from theartofchart.net - Update on ES, NQ and TF (at the start) and then DX, CL, NG, GC, ZB, HG, KC, SB, CC, ZW, EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD and NZDUSD:
Stan and I are doing our monthly free public webinar on the Big Five and Sectors after the close tonight and we'll be looking at AMZN, AAPL, FB, NFLX, TSLA, IBB, IYR, XLE, XLF, XLK and XRT. If you'd like to attend you can register for that on our April Free Webinars. We are also of course doing our monthly free public Chart Chat on Sunday and you can register for that on the same page.
The possible triangle resistance on SPX broke and ES and SPX have both broken their respective IHS trendlines at the highs today, so all of ES/SPX, NQ/NDX and TF/RUT have now broken up from their IHS necklines. This is the inflection point I was looking at in Chart Chat on Sunday and if this is going to be a Janus bear flag reversal, then I'd expect a failure here or not too much higher. If the IHSes are for real then the respective targets on SPX/NDX and RUT would be in the 2792, 6920 and 108 areas respectively. I'll be taking the bull targets seriously if SPX reaches 2712. Intraday Video from theartofchart.net - Update on ES, NQ and TF:
NQ/NDX and RUT/TF have now both reached their respective IHS necklines and broken slightly over them, so the possible Janus bear flag setups on both are set up and ready to fail into the retests of the previous lows. ES/SPX is the only laggard, but of course there was already a strong target at the last low there. In the video below I'm saying that ES/SPX may have topped out on this move yesterday. We'll see.
I was asked a couple of questions about a fuller explanation of Janus flags yesterday and they are a pattern of mine so they aren't written up formally anywhere yet. I tweeted a good recent example on CL and more explanation on my twitter this morning, so you can see that there if you want. Intraday Video from theartofchart.net - Update on ES, NQ and TF:
So what is happening on SPX here if this high was made yesterday? Well Stan has been running this as a likely triangle forming and the high yesterday was at a high quality triangle resistance trendline. If so, then SPX is likely topping out here for a return to triangle support, now in the 2610 area.
One way or the other SPX has been compressing for a while here and pressure is building for a strong move out of this compression. My Three Day Rule target says the expansion will very likely be downwards, but while that stat has never failed since the start of 2007 over dozens of instances, that just means that it hasn't failed yet, as there is no such thing as a definite outcome on any setup or statistic. Fill the open breakaway gap from 2711.93 on SPX and that expansion could still be upwards. SPX 60min chart:
In our Sunday Chart Chat I was looking at an attractive scenario for this week where ES/SPX would make a higher high this week to complete a possible IHS forming, break up slightly from that and then fail back into a minimum target at last week's low at 2553.80, also the target on the Three Day Rule triggered by Friday's clear break back below the 5dma on SPX.
What is a Janus Flag? It is a bull or bear flag that looks like a reversal pattern forming, breaks up (or down) and then rejects hard into a retest of the previous low (or high).
I've explained in detail how I see this setup, and given a likely Three Day Rule invalidation level at a fill of the open gap from 2711.93. Full Intraday Video from theartofchart.net - Update on ES, NQ and TF (at the start) and then DX, CL, NG, GC, ZB, HG, KC, SB, CC, ZW, EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD and NZDUSD:
The open breakaway gap from 2711.93 is shown on this SPX 60min chart below, as well as the part formed IHS. If the IHS was to break up and make target, then that target would be in the 2790-5 area. SPX 60min chart:
Stan and I are doing our monthly free public Chart Chat on Sunday, and on Thursday after the close will be doing our monthly free public review of the Big Five and Sectors. If you'd like to register for either or both you can do that on our April Free Webinars page.
It''s been a while since we last saw an example, but one of my strongest historical stats is the Three Day Rule. On this stat, there first needs to be a 2%+ decline, and then on a break back over the 5 day MA, currently at 2627, then on a clear daily closing break back below on either of the next two trading days, then there should be a retest of the previous low (2553.80), before any significant move over the previous high (currently 2672.08). There are no guarantees in trading or analysis, but with the exception of two very marginal higher lows when triangles were forming, this stat has delivered in every instance (so far) going back to the start of 2007.
Unusually I am posting one of our premarket videos for subscribers, but I have a very busy afternoon lined up, and I'm aware I haven't published much this week. This is the full video covering all 19 futures that I look at in the morning. Worth mentioning as well that I may well be away on Monday. Full Pre-Market Video from theartofchart.net - Update on ES, NQ and TF (at the start) and then DX, CL, NG, GC, ZB, HG, KC, SB, CC, ZW, EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD and NZDUSD:
I prepared this post a while before the close today but for some reason my media computer took two hours to encode the video. Everything still relevant now so here it is.
In the interim the backtest into the 2619 area is in progress and assuming that support holds, I'm expecting a higher high to make the second high of a double top at one of the obvious resistance levels above at the monthly pivot in the 2676 area, and the daily middle band, now in the 2688 area. Looking for strong resistance at one or the other. Intraday Video from theartofchart.net - Update on ES, NQ and TF:
