Geopolitical Risks

Well we finally got the retracement I was looking for. It was shallow at 23.6% but the 1990 low established the rising channel from 1904 that I had been mentioning as a possibility since last week. Hopefully everyone saw that when I posted it on twitter after the low. There is still a possibility that a double top is forming at a test of the current highs, but I'm expecting another push up first.  I think the next significant retracement will most likely be a significant high, or start the topping process for such a high. SPX 60min chart:

Why do I think that? well I've been looking for that significant high in the 2011-21 range and on the daily chart there is now clear negative divergence on the RSI 5 and the NYMO. In the short term SPX should break up from a bull flag into my resistance area, but the next significant down day will most likely trigger a strong sell signal like the strong RSI 5 and NYMO buy signal I called at the 1904 low. I'm looking for a test of the daily upper bollinger band before that sell signal triggers, and that is now at 2020, along with the other resistance levels in the same area that I have talked about. SPX daily chart:

My July projection for TLT is chugging along nicely and TLT is now close to channel resistance. There is a possibility that geopolitical events might cause TLT to break up through channel resistance, but failing that I will be looking for at least some consolidation or retracement there. TLT 60min chart:

The wild card here is Ukraine. Markets have so far shrugged off the news that Russia has now invaded Eastern Ukraine with ground troops, in part perhaps because western leaders are in denial and calling it an incursion rather than an invasion. The reality is though that Russia is now waging a conventional war on Ukraine, and the way that develops could be the trigger to start the correction that I am looking for on equity markets in the near future. I'm looking for SPX to test my main resistance zone in the 2020 area before that correction, but depending on the way the Ukraine cards fall, SPX might not get there.

For the very short term the trading day before a holiday weekend tends to lean bullish, and the first trading day of September on Tuesday has been up 12 of the last 18. I am cautiously looking for new SPX all time highs both today and on Tuesday.

Retracement Targets

SPX traded sideways yesterday in what looked quite a lot like a bull flag, but has broken down overnight. It seems very likely that an overdue retracement has started, though we might still retest the current high to form a small double top. The main fib retracement targets are the 23.6% fib retrace at 1990, the 38.2% fib retrace at 1980, and the 50% retrace at 1973. The 50 hour MA is at 1992 and might hold for the 23.6% option. Rising wedge support has already broken, so that is no longer support. SPX 60min chart:

I'm leaning towards either of the 1980 or 1973 targets ideally, as this would (on my primary scenario) be setting up a topping pattern for a last new high. I have main support at 1956 at rising wedge support from the January low and the 50 DMA, but if SPX gets that far then a stronger high than I was expecting would already most likely be in. SPX daily chart:

I'm watching the Dow, NYA and RUT charts for hits of the support trendlines on those charts from the last low. Dow is a decent example of the distance yet to be covered from the close yesterday. The best fit on SPX would most likely be the 1980 target. Dow 60min chart:

Oil has been rallying a bit and I think we may see a retest of broken triangle support in the 96.5 entry. I don't think that a significant low is in so if we see that retest, that should be a short entry. WTIC daily chart:

I'll be looking for the retracement pattern today and will post it on twitter when I have identified it. I'm looking at this as a retracement to buy before another (probably last) push up into a significant high.

Another Day, Another New High

Another day with no significant pullback and a new all time high yesterday. There is still definitely a small retracement needed soon but that will happen when it happens. In the meantime SPX is getting close to testing my main resistance zone, which is now in the 2011-21 area. On the daily chart the resistance levels in the zone are the daily upper band, currently at 2011, and rising wedge resistance from the January low, currently in the 2015 area. The daily upper band will most likely cross 2015 within a couple of days. SPX daily chart:

On the weekly chart the resistance levels in the zone are the weekly upper band, currently at 2021, and rising wedge resistance from the 1343 low, also currently in the 2021 area. As well as being resistance levels these are all also targets, so if we are to see a strong reversal from that resistance zone my ideal high would currently be in the 2021 area. SPX weekly chart:

If we do see some retracement today then I have SPX rising wedge support in the 1993 area,  and possible rising wedge turns channel support in the 1985 area. We could see a deeper retracement, but if so that would suggest strongly that 2005 was the first high of a small double top. SPX 60min chart:

As a marker for when a high could be made, the RUT chart may be useful. The larger IHS never formed well but the original IHS has a target in the 1190 area and that is a decent fit with my strong resistance zone on SPX. I'll be keeping an eye on this chart. RUT 60min chart:

My primary scenario here is that SPX hits the 2011-21 resistance zone and makes the second high of a double top targeting the 1800 area on a break below the 1904 low. If we see a clear break above that zone my next resistance area is possible rising channel resistance from the 1343 low in the 2060-2100 area, but I'll see whether SPX breaks up before I have a really close look at that scenario.

Possible High Forming

Last Thursday I was outlining the two main options for the current move as I see them. The first option is failure at 2010-20 resistance to make the second high of a double top targeting the 1800 area. The second option is that SPX breaks over that resistance and heads to currently theoretical channel resistance (from 1343 low), somewhere in the 2060-90 area. I said then that I favored the first option, but obviously we might see a break up into the second.

So where are we now? Well we haven't reached my resistance area yet, but we have a clear 70% bearish rising wedge established from the 1904 low, and increasing negative divergence on the 60min RSI 14, the daily RSI 5 and, always nice to see, the daily NYMO. We have a promising looking top setting up for that 2010-20 test, and the odds of a failure there are improving. SPX daily chart:

What this setup could really use here very soon though would be a test of rising wedge support on SPX, and yesterday's daily candle was promisingly bearish. I posted the chart showing the two main options if we were to see that retracement today on twitter last night and they are either, a 23.6% fib retracement to rising wedge  support in the 1987.5 area or, a 38.2% fib retracement to the 1979 area.to turn the rising wedge into a rising channel. The smaller retracement would be the more bearish on the next move up. After that retracement I'd be looking for a further move up to test strong resistance in the 2010-20 area, and then most likely failure there. SPX 60min chart:

So what looks toppy to me here? Well there's the overall setup on SPX and other US indices of course, but the DAX weekly chart probably puts it best. I posted this chart on 1st July with comments which I have left on there, and since then DAX has broken the rising channel and tested double top (or possibly H&S) support. The rally has it retesting broken channel support at the moment.  I'm not looking for a move to test overall rising megaphone support from 2009, though I'm not ruling that out, but the next big leg up on SPX will most likely be a more modest leg up to retest megaphone resistance on DAX, and it's going to need some room for that. A 20%+ move from the high to the double top target would set that up nicely and, whichever way you look at it, that move is most likely coming soon. DAX weekly chart from 2006:

Why now though? Well for that I'm looking at Shanghai. Everyone's been talking about the break up on SSEC but actually all it has managed is to rally to test falling wedge resistance. It hasn't broken up yet, and the long term setup favors one more move to falling wedge and long term support in the 1600 area. It could go the other way but I strongly suspect not, not least because the daily chart is showing likely reversal here, and that topping process is happening now. That clock is ticking. SSEC weekly chart:

We may not see it (again) but I'm favoring that retracement today and most likely the higher target in the 1987 area, but possibly as far as the lower target in the 1979 area. I would be very surprised to see a significant high made at the current level so if we see that retracement, that should be a dip to buy.

Some Retracement Imminent ..... Probably

ES is well up overnight, and if that continues into trading hours, then there is an obvious target and significant resistance at the daily upper band, now at 2003 but possibly moving as high as 2005/6 on a strong open today. If that is hit and we see a strong rejection there that would then open up the daily middle band, currently at 1952, as a possible retracement target. SPX daily chart:

There was some weakness/consolidation on Friday, and that did not hit the obvious trendline targets for a retracement. I have rising wedge support in the 1978 area this morning, and have added a scenario on the chart for a possible target in the 1974 area, as there is a nice confluence of support levels there. SPX 60min chart:

I've included the NYA chart this morning as this may be a useful indicator early this week. The overall pattern on NYA is a very nice looking falling megaphone from the high, which is very likely to break up soon with a target at a test of the current all time highs. That's because as well as being a bullish leaning pattern, the megaphone also did a bullish underthrow at the last low. As long as NYA doesn't break up and make that target this morning, any retracement here is very likely to reverse back up afterwards to make that target. Obviously that megaphone may break up and make target today, in which case that reassuring unmade target would be lost. NYA 60min chart:

On my RUT chart the short term double top setup that I was looking at on Friday morning is forming well, though I am concerned at the strength of RUT futures overnight. I still like the retracement scenario that I laid out on Friday morning, and the IHS currently looks unbalanced with a comparatively very small right shoulder. Have I seen IHSes like this break up and make target in the past? Yes, more than once. I'll be watching this setup carefully as a very strong and sustained break over the neckline on RUT today would be a big warning signal that equities may be accelerating to the upside. RUT 60min chart:

Are we going to see a retracement early this week to test the support trendlines on the various US indices 60min charts? I think so, but short term such retracements are counter-trend of course, and if we are going to see a break past 2015-20 resistance in coming days/weeks then it might be that we would see those support trendline tests after that and obviously at a higher level. I'm more confident here that SPX will at minimum return to at least retest the highs after that retracement than I am that we see that retracement. I'll be watching the NYA and RUT charts for clues today, and will be actively looking for a decent looking short term high to short for a retracement today or tomorrow. That retracement may not happen however and that needs to be borne in mind here.

I did a weekend post on USD, EURUSD and bonds yesterday that has some long term charts that are well worth a look if you haven't already seen them. You can see that here.

US Dollar - Infinity and Beyond?

At the end of the two previous QE periods there have been three strong trends that have emerged each time. The first two are a significant pullback in equities and a strong rally on bonds. We may be approaching a significant high on equities soon, and I have a setup for a major further rally in bonds, though that may well only trigger if we see that strong pullback on equities.

The third is a strong rally on USD, and it's that I would like to talk about today. USD has advanced strongly since hitting 78.93 in May, and I want to show where that is likely to lead over the next few months, and where it might then go over the next few years.

I'll start with EURUSD, which is very important to USD because the Euro makes up an impressive 57.6% of the USD index. EURUSD broke down from the rising wedge from the 2012 low in July, and at the same level broke below the neckline of an H&S targeting the 1.30 area, which would be close to a 50% retracement of the move up from the 2012 low.

There was a decent bounce setup developing on EURUSD with a 70% bullish falling wedge from the high, but as I mentioned a few days ago, that has now broken down with a target in the 1.26 area. I find these patterns to be reliable on downward breaks so EURUSD may well make that target. The full rising wedge target is of course a full retracement to test the 2012 low at 120.42, and that isn't generally a high probability target, though for reasons that I explain below, that target may well be a realistic one in this instance. EURUSD daily chart:

On 15th April, shortly before the May low, I posted the USD daily chart looking at two nested double bottoms that had formed on USD. You can see that here. USD has just made the 82.25 target on the smaller double bottom that I was looking at then, and is well on the way to the larger double bottom target in the 84.25 area. If that target is made then a test of the 2012 high at 84.95 would not be far away. USD daily chart:

What I haven't posted for a year or so is my big picture USD chart from 1980, and I'll post that now with comments on what the short and longer term targets could be for this move. The obvious shorter term target is declining resistance from the 1985 high at 164.72. That's in the 86/7 area at the moment, but it only gets really interesting if that is tested and breaks. If that happens then .....

There are two possible large double bottom setups on the USD longer term chart, and the smaller one has a target in the 105 area on a break over the 2010 high at 88.71. The larger one is so big that it's very easy to miss, but that would target new highs over the 1985 high (at 164.72) on a break over the 2001 high at 121.21. USD monthly chart:

What could possibly prompt a doubling of USD from the current level? Well firstly I'd say that it may not happen, even if the long secular USD bear market resistance trendline at 86/7 breaks up. There is a path back to the 1985 here, but USD may not take that path. However it isn't that hard to see what might prompt such a huge move.

The first reason might be extreme relative weakness in major USD index components. EURUSD (57.6% of the USD index) had a crisis a couple of years ago and is in a very long depression, with Euro-zone GDP still significantly short of the 2008 level. It isn't that hard to see current policies ending in a much larger crisis that could depress EURUSD well below 2012 levels.

JPYUSD (11.9% of the USD index) is the currency of a country in a multi-decade depression, with levels of government debt so high (250%+ of GDP?) that default is really a matter of when rather than if. I called JPYUSD short on 14th November 2012, you can see that post here, and I'd note that the full rising wedge target is a retracement to the 2007 low at 80.55, with JPYUSD currently at 96. From a long terms fundamentals perspective I think that Yen might be an interesting long if it was to reach the 1982 low at 36.04, but I'd have to see a promising setup there, particularly if Japan had not yet defaulted.

So 69.5% of the USD index is made up of two currencies that may go into death spirals due to economic depression and future government default. What else is there? Well there is also the long term chart on bonds of course, and the implications from that are well worth considering here.

I last posted this TYX (30yr bond yields) chart a year or so ago I think, with this amazing 29 year falling channel on 30yr bond yields. TYX is at an inflection point right now, and may retest the lows before we see the move to test channel resistance, but if that channel should then break up in a year or two, breaking the downtrend from the 1980 high, then a further break over the 48-50 resistance level would trigger a double bottom target in the 72 to 77 area. If the two major components of the USD index were at that point still stuck in depressions with ultra-low interest rates, that could make the US Dollar extremely attractive relatively, and fuel a huge move there.

How good is that falling channel as a predictive tool? Well I posted it on 3rd February 2011 as it happens, and you can see that chart here, TYX then made the second high of a double top intraday at channel resistance a few days later on 9th February 2011 and then almost halved over the next year into the 2012 low. A break over channel resistance, as and when we see it, would be something to be respected, and what we have been watching develop over the last few years looks a lot like a long term bottom forming so far.  TYX monthly chart from 1985:

So what's the takeaway here? Well USD and EURUSD may just be starting big moves that may last several years, and USD looks like a buy on any decent dips. I'll be watching these and posting regular updates. The other takeaway is that if we see the big further rally on bonds that I was looking at in the TLT projection I posted on 28th July, you can see that chart here, then when that rally ends it may be the start of a huge decline on bonds (and rise in bond yields) that may play out over decades. I'll be watching for that entry point, and when we see that it may well make my short call on Yen in November 2012 look like relatively small potatoes.

Four Patterns and a Theory

All seven of the IHS patterns that I've been watching since the lows last week have now made target apart from TRAN and RUT, and of those two, TRAN has come so close that if it failed here, I'd consider it a technical hit. RUT has barely made it out of the gate of course, but I have a theory about that I'll be coming to later in this post.

I also now have decent trend patterns for this move up on five of those US indices,  and passable patterns on the other two, so this move up has now taken form, and a retracement of some kind should be coming shortly.

SPX obviously made a new high yesterday, and that new high was not immediately rejected. If we see higher today, which isn't a given as all seven patterns have already hit their resistance trendlines, then the obvious target is the daily upper band, now at 2001. SPX daily chart:

Of the four patterns with decent (three touches) resistance trendlines in play here NDX is the most advanced as it actually broke down from the rising wedge there yesterday. This is the only pattern where the lower trendline is not taken from the actual low, and the obvious retracement target is to the rising support trendline from that low, currently in the 3995 area. NDX 60min chart:

Next is SPX, where there is also a rising wedge from the low with the resistance trendline established yesterday. The obvious retracement target is wedge support, currently in the 1973 area and rising at about six points per day. I mention that last point to underline that a decent retracement to that trendline would be happening today or Monday. SPX 60min chart:

On WLSH, which is the broadest US index, a very nice rising wedge has now formed from the lows. Again the obvious retracement target would be at rising wedge support. WLSH 60min chart:

On Dow the pattern here is a rising megaphone. This and the NDX pattern above are the marker patterns here, as they have furthest to go to their targets. The rising wedges on SPX and WLSH could break and evolve into a channel or a megaphone, but if NDX and/or Dow break down then this retracement may be larger than I am currently expecting. Rising megaphone support on Dow is currently in the 16800 area. Dow 60min chart:

The IHS on RUT stands alone here, as it never really made it out of the starting gate. I have a theory though that RUT may be forming a larger IHS here at the 1164 resistance level and possible IHS neckline. If a retracement on the other indices is imminent, as seems likely, the RUT may well be forming a short term double top with a target in the 1130 area, with the ideal right shoulder low for symmetry in the 1131 area. I've drawn up this scenario on the chart below and if this IHS forms and breaks up, the target would be at new highs. That would have very bullish implications for other equity indices so I'll be keeping a close eye on that. RUT 60min chart:

The last things to talk about today are the Jackson Hole speech at 10am and Draghi at 2.30pm. These may be significant market movers and I am concerned that the retracement I've been watching for all week may start, and possibly end, with one of those speeches if the reaction is violent. I'll be keeping these patterns on my screens all day to watch progress. What I would like, if Lady Fortuna is taking requests today, would be for a touch of the upper band at 2001 today and rejection there into a retracement that lasts into Monday. We'll see how that goes.

Bigger Picture Options

SPX made the IHS target at 1987 and is now close to testing the current all time high at 1991.39. I'm expecting to see a new high made, very possibly today. So what then?

Assuming that we don't see a strong rejection at the highs retest, the obvious next target just above is at the daily upper band, currently at 2000. I would very much like to see a decent retracement shortly, at the least to give me more to work with in terms of trendlines, and the obvious place to see that retracement start is now at a test of that daily upper band. On the bigger picture, if the rising wedge from the January low is still the main pattern here, then I would not expect this move to close a day back over rising wedge resistance, currently in the 2015 area. SPX daily chart:

In terms of the lack of retracements from the low last Friday, this is a problem because this may be telling us that this uptrend has much further to go. My primary scenario is still that SPX is making the second high of a double top, and as I mentioned above, I would be looking for hard closing resistance at wedge resistance in the 2015 area This wedge however is part of a larger setup from the November 2012 low at 1343.35, and looking at that chart, my primary scenario is only one of the two main options here.

The low at 1904 was a very good test of rising support from that November 2012 low. That has confirmed that rising support trendline as main support, and that should be the lower trendline of the current overall pattern. The options for that pattern are rising wedge, channel or megaphone, but I'm disregarding the megaphone option for the moment as I can't see any support for it, and working on the assumption that this pattern is either a rising wedge (my primary scenario) or a rising channel (my secondary scenario). Of these two I already have a decent rising wedge resistance trendline and that is in the 2020 area, along with the weekly upper bollinger band. That should be strong resistance and only on a conviction break above would I switch to my alternate channel scenario. The channel scenario has channel resistance currently in the 2060 area, but rising of course.

The trendline setup here strongly favors the rising wedge from the November 2011 low scenario, as the resistance trendline for that has already been established, but my alternate scenario has been gaining traction because of the strength of this move. We may see this move break up over rising wedge resistance in which case I would be moving over to the higher channel target. Either way it should be clearer what the likely outcome will be by the time we get close to the 2015-20 resistance area, as if I don't have a decent bear setup by then, we'll most likely break up. SPX daily chart from 2012:

The double bottom on WLSH, and the IHSes on NDX, Dow and SPX have now all made target, leaving TRAN and NYA close to target and RUT still trailing far behind. One of the two reasonable patterns from this low that I have here is on RUT, and that is a rising channel suggesting that we may well see a significant further retracement from RUT short term to test channel support in the 1140-5 area. Given that I'm expecting to see a retracement starting soon on other indices, that target looks reasonable and may well be made. This is still a nicely formed IHS on RUT, but I'm very doubtful about seeing that target made unless SPX breaks up towards my alternate higher target. RUT 60min chart:

The other reasonable quality pattern I have here is on NDX, where the FOMC low yesterday made the third hit on a decent support trendline from the IHS right shoulder low. That is most likely the lower trendline on a rising wedge and as and when that breaks I'd be looking for a retracement to test rising support from the last low, currently at 3980 and rising at about ten points per day. I'll be watching for that break, and will call it on twitter when that happens. NDX 60min chart:

I've been looking at a possible bounce setup on EURUSD and that is still in play. However the latest decline is either a bullish underthrow of the falling wedge for that bounce, or that falling wedge is breaking down with a target in the 1.26 area. Given that there is already an open H&S target in the 1.30 area, I'm leaning towards the break down. If EURUSD is going to bounce it needs to be very soon. EURUSD daily chart:

Bonds have pulled back a bit in the last few days but nothing so far that is threatening the rising channel from the January low. TLT daily chart:

SPX and most other US indices are very short term overbought and I'm expecting to see a significant retracement starting soon. The obvious place for that to start would be at the retest of 1991 or at the daily upper band, currently at 2000. The obvious target would be rising support from the 1904 low, currently at 1967 and rising at about six points per day. I would note that I have possible rising channel resistance in the 1995 area now, and that could be a target that will need to be hit before that retracement.

IHS Update

Another grinding day up yesterday, and the Dow IHS has also now made target. At this point, of the main US indices, NDX has made and far exceeded the IHS target there, Dow has just made the IHS target and WLSH has made the double bottom target there.

That leaves four of these main index bullish reversal patterns that have not yet made target. The first of those is the IHS on SPX. That came within six points of the IHS target at 1987 yesterday and could make that today if we have another grind up. SPX 60min chart:

The NYA IHS is also close to target and could make it to target on a strong day today. NYA 60min chart:

The same applies to TRAN. TRAN 60min chart:

RUT has been the problem child IHS from the start and is the one that I'm thinking might not make target. If it does make target then would most likely do that in the context of significantly higher highs on SPX. RUT 60min chart:

So what happens after the remaining IHS patterns, with the possible exception of RUT, make their targets? My lean is towards new highs on SPX that could go as high as rising wedge resistance in the 2015 area. That new high should be the second high of a double top before a larger move down.

Will it be the second high of a double top? Well the bears have been run over repeatedly over the last couple of years, and while the pattern setup strongly favors that scenario, I'm not ruling out a bullish break upwards. If we do see that wedge resistance trendline broken with any confidence I'll be working up targets for that break, but not before.

Short term we could see a retracement today, and if we were to see that I'd be looking for decent support in the 1968/9 area at the last retracement low and the 38.2% fib retracement level for this move. I'd be looking for a long entry there.

The 50 DMA Breaks Up

The daily RSI 5 closed back over the 70 level and my RSI 5 / NYMO buy signal has now made target, now making that 16 of the 18 such signals since the start of 2007 to make that target, with the other two failing just above 60. The 50 DMA broke up with conviction yesterday and both that, now at 1958, and the daily middle band, now at 1952, should now be strong support. The next bollinger band target is in the 2000 area and I am expecting this move up to fail under rising wedge resistance, now in the 2015 area. The pattern setup here is suggesting strongly that on the bigger picture we are making the second high of a double top before a larger retracement coming sometime soon. SPX daily chart:

The IHS target on SPX is at 1987 and I am expecting that to be made as the minimum upside target here. SPX 60min chart:

The uptrend has the support for the moment of IHS patterns that have broken up across all the main US indices. Only NDX has made target so far and all the others have some distance yet to cover. One of the nicest looking IHS patterns is on RUT, though that is also the weakest index. The IHS target is in the 1190-5 area and if that target can be made then we should see new highs on most other indices while that happens. RUT 60min chart:

There are three indices where I am doubtful about new highs being made, and they are RUT, Dow and NYA. These all have IHS targets well short of new highs, and the bigger picture on Dow looks to me as though the main high may have already been made there. NYA is the index of all stocks listed on NYSE so makes a good very broad index to keep track of. NYA 60min chart:

I'm not seeing anything to suggest that we might be close to a high on this uptrend, and as long as the SPX holds above the 50 DMA and daily middle band over the rest of the week I'll be assuming that the short term uptrend is solid. Most indices are forming bull flags on the 60min charts, and I'm leaning towards seeing another day of consolidation with a mild upward bias today.

A Day In The Life

There's not much to add to Friday morning's post here really, other than we have since had a V retracement and shaken out some weak longs, so I thought I'd do something different this morning and show you what I was doing intraday on Friday, as the pattern setup was a lovely example that I'm planning to use in a book I'm (slowly) putting together.

As I've mentioned before, I'm on the team of the Princeton Trader trading room, led by Mike Vacchi, and we primarily trade ES intraday there, though we also trade oil, gold, bonds and a few other things on a smaller scale. I've stripped down the chat from Friday's session as far as I can, though it's still longer than I was hoping for, and will show it below interspersed with charts I posted intraday to show the evolving setup over the day.

This stripped version understates the contribution of other team members in the room, but it needs to as I want to show the very nice evolving pattern setup over the day, and even this stripped down version is rather long. The people commenting are chappell_charts (myself), Mike Vacchi, eubie (Stephen Eubanks of MarketTalk with Eubie), other PT trading team members Tony Rago and Todd Robetoy, and assorted room members.

michael_vacchi (07:25:17 AM): as long as middle band holds on a closing basis, all dips are buys

michael_vacchi (08:25:48 AM): taking 1/4 of long here 58 +6

stan_n (08:50:43 AM): resistance on SPX at 65-67ish - should get tested this AM

chappell_charts (08:54:20 AM): I'm S 58 looking for AM dip

chappell_charts (09:03:25 AM): I have a 60min sell brewing. Last one died but I'm keeping an eye on it

stan_n (09:23:14 AM): options expiration possible fun and games today

todd_robetoy (09:32:06 AM): overnight has unfinished business down to 54ish. Reminder indicators not as reliable during globex

michael_vacchi (09:32:18 AM): OPG 1959

michael_vacchi (09:34:59 AM): my goal is to get this thing IDed by 1030

chappell_charts (09:39:44 AM): really nice little double top setup here for morning dip if Es can get under 56

chappell_charts (09:44:17 AM):
Any of you guys notice a possible rising wedge resistance trendline on the SPX chart I used in my post this morning?

chappell_charts (09:45:00 AM): because we hit it: http://screencast.com/t/6dygmkxtPt

chappell_charts (09:59:50 AM): Heads up on this wedge. If we were to fill the gap and keep going I have wedge support currently in the 43 area

chappell_charts (10:01:55 AM): 1min sell brewing

eubie (10:05:29 AM): <1960> looks FAILED AUCTION ALERT 1st attempt (new high that fails with any umph)

chappell_charts (10:14:33 AM): 1min sells brewing SPX and NDX

chappell_charts (10:15:35 AM): 1min sell signal – also on NDX

chappell_charts (10:16:26 AM): On a break below 56 the double top target would be 51.5

chappell_charts (10:18:04 AM): Add S 59

chappell_charts (10:18:33 AM): intraday

chappell_charts (10:20:53 AM): Let's see what bears have this morning, if anything

chappell_charts (10:41:08 AM): Bears getting going IMO

chappell_charts (10:41:19 AM): this may be unexpectedly deep

todd_robetoy (10:41:35 AM): RUMOR  Ukrainian troops destroy parts of an armed convey from Russia. Ceasefire is no longer in effect

chappell_charts (10:41:39 AM): On a break under 56 the double top target would be 51

chappell_charts (10:42:15 AM): 1min sell made target

chappell_charts (10:42:51 AM): breaking 56

todd_robetoy (10:43:13 AM): 52.75 is a biggie, didn’t mean much since hit at eod yesterday see if it will now

chappell_charts (10:44:22 AM): SPX 5min sell signal

michael_vacchi (10:46:20 AM): 52.25 free ride on long

todd_robetoy (10:46:41 AM): 47.25 unfinished from yesterday

michael_vacchi (10:46:46 AM): out

chappell_charts (10:47:14 AM): big support here

chappell_charts (10:47:45 AM): took 53 from 58

chappell_charts (10:48:29 AM): still short on 59 add

michael_vacchi (10:49:19 AM): 1961 must be the HOD or it activates some very bullish stats on my stuff

chappell_charts (10:49:22 AM): weak 1min buy signal

michael_vacchi (10:49:56 AM): if a war in Ukraine can't close below middle band then nothing can

david_k (10:50:15 AM): depends if it is real

michael_vacchi (10:51:34 AM): Headline Minefield = deals with Europe news primarily, a rumor starts regarding X (usually on Twitter), price move in one direction on the rumor, the rumor is usually made by someone with no real authority, then the rumor is denied causing price to reverse violently then steadily and gets back to where price was before the initial rumor.

chappell_charts (10:51:38 AM): stop on 59 short at 58.75

todd_robetoy (10:51:47 AM): 49 unfinished now

todd_robetoy (10:51:55 AM): and still have 47.25 from yesterday

michael_vacchi (10:54:19 AM): 46 middle band

chappell_charts (10:55:42 AM): Confirmed rising wedge on SPX: http://screencast.com/t/LfZ5OMIr

todd_robetoy (10:55:59 AM): 42.75 unfinished but this is close enough, now we have 37.75

chappell_charts (10:56:03 AM): Rising wedge has broken down. This is the retracement

chappell_charts (10:58:30 AM): SPX 5min sell made target

eubie (10:59:19 AM): +16 / eubie (10:05:26 AM): <1960> looks FAILED AUCTION ALERT 1st attempt (new high that fails with any umph)

chappell_charts (11:00:09 AM): weak 1min buy died

chappell_charts (11:00:30 AM): may well get a decent bounce here but most likely will go a bit lower

todd_robetoy (11:00:39 AM): crap unfinished up to 51.50 now as well as 37.25 pick one

chappell_charts (11:08:04 AM): if we are really in luck we retest lows & get buy signals brewing

paul_b (11:09:02 AM): amazing room

chappell_charts (11:09:59 AM): On a break over 49.5 the double bottom target would be 57.25 - might be overambitious

michael_vacchi (11:10:53 AM): ok getting a bounce

michael_vacchi (11:11:20 AM): bulls need a higher low vs 42.25

todd_robetoy (11:12:16 AM): here comes unfinished 51ish, still have 37.25 and my 17's 

michael_vacchi (11:12:16 AM): back over middle band

chappell_charts (11:12:53 AM): that could be it for the retrace, but rising wedge setup here says there should be more

chappell_charts (11:13:06 AM): assuming bounce then decline further

michael_vacchi (11:13:25 AM): losing middle band again is the tell on that Jack

michael_vacchi (11:15:32 AM): that was 10 coming back, amazing

chappell_charts (11:17:08 AM): took 50.75 from 59 - expecting to get a better short entry later

michael_vacchi (11:17:27 AM): the trade for another leg down is short here stop over lower level 52.50

chappell_charts (11:17:58 AM): Flat & getting some coffee

chappell_charts (11:18:34 AM): If we do go lower we'll be looking hard for the low. Once we get that I suggest everyone go long

chappell_charts (11:19:05 AM): don't have a resistance trendline until we get a confirmed high on this bounce

michael_vacchi (11:20:48 AM): bias, retest and fail

chappell_charts (11:20:52 AM): If we go lower I have the 38.2% fib retrace at 35/6 and the 50% retrace at 28/9 - the 50% retrace is a good match with the wedge turned channel support you can see pencilled in on the SPX 60min chart I posted this morning. 2nd one down on the post

chappell_charts (11:22:20 AM): If we retest lows here 1 & 5min buys should start brewing

chappell_charts (11:22:56 AM): we have an open 60min sell signal here in the background

michael_vacchi (11:25:23 AM): lost middle band

michael_vacchi (11:31:12 AM): captain obvious checking in on twitter: Ukraine and Russia fighting is not good news going into the weekend

todd_robetoy (11:31:24 AM): lol

chappell_charts (11:39:04 AM): I have an alternate bull scenario if the current low area holds. This could be a bullish underthrow before the rising wedge breaks up with a target somewhere in the 2015-20 area. Watching with great interest here

chappell_charts (11:39:43 AM): low today pretty much a perfect retest of SPX IHS neckline. It could hold

michael_vacchi (11:42:18 AM): higher low ES on multiple timeframes

michael_vacchi (11:42:29 AM): long 47

michael_vacchi (11:43:11 AM): 1944 is the risk marker

michael_vacchi (11:44:19 AM): if bulls can't bounce this then likely we make a deeper low

chappell_charts (11:46:25 AM): Updated version of the SPX 60min chart I used in my post this morning: http://screencast.com/t/MCIrckeoUcFw - We could reverse back up here, very bullish, wedge breaks up with target 2015-20 area, or continue to 38.2% or 50% fib retrace.

todd_robetoy (11:49:29 AM): come on bulls convert 46

chappell_charts (11:49:39 AM): On a retest of the lows a 5min buy would start brewing

paul_b (11:50:34 AM): news

michael_vacchi (11:50:35 AM): risk marker breached

eubie (11:52:52 AM): -992 tics @ 1942

michael_vacchi (11:53:03 AM): -1265

michael_vacchi (11:53:07 AM): -1257

michael_vacchi (11:53:13 AM): -1113

michael_vacchi (11:53:18 AM): add 41

michael_vacchi (11:53:22 AM): 44 avg

michael_vacchi (11:53:49 AM): -1233

michael_vacchi (11:53:54 AM): -1271

michael_vacchi (11:53:58 AM): 1297

michael_vacchi (11:54:00 AM): 1299

todd_robetoy (11:54:00 AM): there’s the 39.75

michael_vacchi (11:54:04 AM): 1316

michael_vacchi (11:54:09 AM): 1240

michael_vacchi (11:54:12 AM): 1232

eubie (11:54:53 AM): -1300 tics @ 1939.00 / ES

michael_vacchi (11:55:01 AM): those are ticks

michael_vacchi (11:56:13 AM): -1320

michael_vacchi (11:56:17 AM): 1308

michael_vacchi (11:56:37 AM): added 38

eubie (11:56:59 AM): -1079 tics @ 1937.75

paul_b (11:57:34 AM): getting bounce

chappell_charts (11:57:34 AM): 5min buy brewing

michael_vacchi (11:57:46 AM): -1328 low tick on that move

michael_vacchi (11:58:13 AM): 42 avg

chappell_charts (11:58:19 AM): I have a declining channel on the SPX 1min: 

http://screencast.com/t/ylyh6wYej1ZZ

chappell_charts (11:58:52 AM): that might just be wave A channel though

chappell_charts (11:59:12 AM): 5min buy trying to fix

chappell_charts (12:00:11 PM): 5min buy signal

todd_robetoy (12:00:42 PM): 32.75 next st support for me

chappell_charts (12:01:08 PM): small L 40

chappell_charts (12:01:30 PM): SPX has tested 38.2% fib retrace level

chappell_charts (12:01:44 PM): candidate low area

chappell_charts (12:04:12 PM): Minimum low expectation now satisfied. Might go lower to 50% retrace though

binu_j (12:04:31 PM): where is that at?

chappell_charts (12:05:00 PM): 7 points lower binu - so 1930 Es approx.

chappell_charts (12:05:27 PM): Bull case is solid overall IMO unless we see Tuesday IHS right shoulder lows taken out

chappell_charts (12:08:37 PM): New SPX rising channel established at this low. Bias is bullish unless that breaks

chappell_charts (12:09:56 PM): Rising channel from the high broken

michael_vacchi (12:10:00 PM): 1/3 off 44 +2, 42 stop on rest – even

chappell_charts (12:10:01 PM): Add L 43.5

todd_robetoy (12:10:32 PM): middle band here

michael_vacchi (12:10:54 PM): not going even stop just yet

michael_vacchi (12:11:07 PM): rather not get shaken out of a ripper

michael_vacchi (12:11:13 PM): if that's what this is

chappell_charts (12:20:25 PM): restested broken falling channel resistance

chappell_charts (12:24:58 PM): bulls need this to be higher low

chappell_charts (12:26:23 PM): This is the new rising channel established from the lows: http://screencast.com/t/ee8s0y3M

chappell_charts (12:27:13 PM): This is a beautiful setup to return back up. If it delivers I may well use it in the book I'm writing

michael_vacchi (12:32:25 PM): 46 prints

michael_vacchi (12:32:32 PM): 42.25 free ride stop

chappell_charts (12:35:37 PM): 5min buy nowhere near target - Es needs short term higher high

michael_vacchi (11:58:13 AM): 42 avg

michael_vacchi (12:45:23 PM): 48 prints

tony_rago (12:46:52 PM): need ES to reach for the 52

chappell_charts (12:48:12 PM): Poss IHS neckline here

chappell_charts (01:03:20 PM): testing rising support from LOD

eubie (01:04:43 PM): -903 tics @ 1943

chappell_charts (01:04:48 PM): broke rising support from LOD

chappell_charts (01:04:54 PM): poss lows retest coming

chappell_charts (01:05:45 PM): bulls need higher low here

chappell_charts (01:06:10 PM): 1min RSI at 30, may reverse back up here

chappell_charts (01:08:30 PM): 5min buy signal still not close to target

michael_vacchi (01:14:32 PM): over 4850 and converting that makes you looking for where the squeeze lives

chappell_charts (01:19:29 PM): On a break over 48 the IHS target would be 58.75

chappell_charts (01:22:49 PM): If we break back up over 48.5 we could well do a V - would need to be soonish though. Limited time offer as right shoulder can't extend too far

michael_vacchi (01:23:05 PM): V is good

chappell_charts (01:25:12 PM): we like Vs

chappell_charts (01:31:29 PM): needs over 47 very soon

michael_vacchi (01:31:31 PM): we're in free ride so rest is up to market

graham_l (01:31:53 PM): where you guys long from

michael_vacchi (01:33:11 PM): I'm 42 avg graham

chappell_charts (01:33:18 PM): I have both my longs on single tick stops. L43.5 at 43.75 stop. L 40 at 40.25 stop

michael_vacchi (01:33:30 PM): 47/41/38 and took 1/3 44 +2

michael_vacchi (01:33:36 PM): 42.25 free ride stop

chappell_charts (01:34:45 PM): Under 42.75 the double top target 35.5, but effectively retest lows target

chappell_charts (01:34:57 PM): taking too long

chappell_charts (01:35:37 PM): Needs to hold 5min mid band ideally too, that's at 44.75 & being tested hard

chappell_charts (01:37:26 PM): 43.5 long stopped at 43.75

chappell_charts (01:38:14 PM): I'm putting my second long on 42.25 stop with yours Mike

chappell_charts (01:38:24 PM): under 5min mid band

todd_robetoy (01:40:50 PM): Vpoc 45.50

eubie (01:54:03 PM): -751 tics @ 1942.50

michael_vacchi (01:56:01 PM): stopped out 42.25 +.25

michael_vacchi (01:56:44 PM): the typical uptrend scenario would be a floor at 37s

michael_vacchi (01:56:59 PM): to go with the floor at 23s that started the last move up

chappell_charts (01:57:06 PM): stopped out 42.25 for +2.25

chappell_charts (01:58:26 PM): nice declining resistance trendline from bounce high. I'll be back in when that breaks, if not before

chappell_charts (01:58:42 PM): 5min buy signal still open

michael_vacchi (01:58:50 PM): I do not want to get left at the station

chappell_charts (01:58:53 PM): might just be forming 2nd low double bottom

michael_vacchi (01:59:11 PM): ok very risky trade here

michael_vacchi (01:59:20 PM): long 43.25

chappell_charts (01:59:25 PM): not planning to get left at the station. If there's a low here, we can catch it

michael_vacchi (01:59:38 PM): room to add

chappell_charts (02:10:03 PM): testing declining resistance from bounce high

chappell_charts (02:14:11 PM): declining resistance from bounce high broken

chappell_charts (02:14:23 PM): add L 45

chappell_charts (02:15:21 PM): testing 5min mid band at 45

chappell_charts (02:21:57 PM): Possible rising megaphone on SPX 1min: http://screencast.com/t/LzxNMKYePG

michael_vacchi (02:24:13 PM): taking 1/3 47.25

todd_robetoy (02:24:14 PM): got L 45.75 late to the party

eubie (02:24:21 PM): +871 tics @ 1947

chappell_charts (02:24:34 PM): I'm adding at higher high

michael_vacchi (02:24:40 PM): filled +4

eubie (02:25:15 PM): 2HR highs in the /ES 1948

chappell_charts (02:25:22 PM): add 48.5

eubie (02:26:16 PM): +797 tics @ 1949

chappell_charts (02:26:26 PM): second time this week I have been bottom ticked out of a long that then took off like a rocket

chappell_charts (02:26:29 PM): annoying

michael_vacchi (02:30:54 PM): moment of silence for hole shorters

eubie (02:31:18 PM): +1175 tics @ 1951

chappell_charts (02:33:10 PM): nice job on the lows everyone

chappell_charts (02:33:30 PM): 5min buy getting close to target

chappell_charts (02:34:15 PM): at a poss IHS neckline

michael_vacchi (02:37:45 PM): 43.50 stop on my long

chappell_charts (02:41:31 PM): I want 53 (close) or better ideally - over SPX 50 DMA, anything over 48 fine though as SPX daily mid band there

chappell_charts (02:41:57 PM): A full V would be nice

michael_vacchi (02:42:10 PM): over 4850

chappell_charts (02:43:11 PM): 5min buy signal trying to fix at target

todd_robetoy (02:45:10 PM): Low looks strong and high borderline weak

michael_vacchi (02:48:07 PM): you guys rock every week

chappell_charts (02:48:23 PM): great team here. I'm proud to be a part of it

chappell_charts (02:48:35 PM): 5min buy made target

chappell_charts (02:48:50 PM): 1min sell brewing - has some room though

chappell_charts (02:50:16 PM): I have possible rising megaphone resistance in the 53 area

chappell_charts (02:51:22 PM): 1min sell signal NDX

chappell_charts (02:51:50 PM): 1min sell signal

chappell_charts (02:52:13 PM): took 50.25 from 48.25

chappell_charts (02:52:18 PM): leaving 45 long on

chappell_charts (02:52:29 PM): hoping to cash that in at 80

chappell_charts (02:52:54 PM): or higher

chappell_charts (02:53:04 PM): IHS target about 83 ES I think

michael_vacchi (02:57:40 PM): crazy ticks on the lows

tony_rago (03:00:06 PM): that IHS looking more solid Jack

chappell_charts (03:00:26 PM): On a break below 48.75 the double top target would be 45.75

chappell_charts (03:06:19 PM): Rising support from the low 46 area

chappell_charts (03:33:15 PM): add L 49.5

chappell_charts (03:33:22 PM): ST low may be in

chappell_charts (03:33:29 PM): poss setup to go to 58

chappell_charts (03:34:46 PM): I think that IHS from earlier may still be in play

michael_vacchi (03:36:50 PM): squeeze lives above 53

chappell_charts (03:40:43 PM): Needs to hold 48 now. On a break below 47.75 the double top target would be 43.75

chappell_charts (03:46:34 PM): Ideal close 53 or higher

david_k (03:47:09 PM): jack...you know it's going to go there

david_k (03:47:42 PM): as long as above middle band...we are heading higher

chappell_charts (03:48:24 PM): Above middle band is ok. Higher than SPX 50 DMA would be ideal

david_k (03:49:01 PM): this market does not like being below it....great example is today...bears had it where they needed it

chappell_charts (03:50:16 PM): bears have been struggling with closes in recent years

chappell_charts (03:50:24 PM): can't seal the deal

chappell_charts (03:50:46 PM): blew it as usual

chappell_charts (03:51:04 PM): there will come a time soon when that changes

chappell_charts (03:51:08 PM): but not there yet

david_k (03:51:42 PM): mv...does that mean we may not see 38 again for a while?

michael_vacchi (03:52:33 PM): I'm not passing judgment until 63 is converted

chappell_charts (03:52:48 PM): david - that was a decent looking low. If the bull scenario plays we won't be back for several weeks

chappell_charts (03:53:05 PM): but like Mike said

chappell_charts (03:53:13 PM): needs confirmation

chappell_charts (03:53:23 PM): 53 print

chappell_charts (03:53:54 PM): that 1min sell failed BTW, but I called that as likely as 48

chappell_charts (03:54:25 PM): 53 or higher ideal close

michael_vacchi (03:55:08 PM): will sell 1/3 53.25

david_k (03:56:23 PM): it continues to amaze me and how dip buyers get rewarded..time and time and time again...

david_k (03:56:59 PM): jack...you are thinking this will change in the future?

chappell_charts (03:57:48 PM): david - chances are this plunge from the late July high was just a warmup for the main event

david_k (03:58:14 PM): this is too fun....I hope not

chappell_charts (03:58:48 PM): fun is being the right side of the trade David

chappell_charts (04:00:45 PM): decent close - just under 50 DMA but well over daily mid band

david_k (04:02:39 PM): yes...thanks for the great week.....friday to friday hit it out of the park

eubie (04:04:26 PM): CASH CLOSE LOOKS 1952.00 / ~$195.82 SPY / VXX $28.85 / QLD $121.85

michael_vacchi (04:04:57 PM): took the 1/3 52.25 +9

michael_vacchi (04:05:06 PM): 1/3 left in free ride 43.50

michael_vacchi (04:05:21 PM): still lots of news risk

michael_vacchi (04:05:27 PM): so take some profits

chappell_charts (04:05:30 PM): there is news risk

chappell_charts (04:05:41 PM): otherwise I'd be leaving everything on

chappell_charts (04:06:57 PM): took 52.75 from 49.5

chappell_charts (04:07:07 PM): leaving 45 on with 45.25 stop

michael_vacchi (04:11:25 PM): Have a great weekend everybody

todd_robetoy (04:12:56 PM): have a great weekend everyone. Fun and profitable day today

david_k (04:49:17 PM): what a joke....

chappell_charts (05:21:31 PM): this joke was on the bears. Not the first time

I could have traded the day better. I took +13.25 ES on the way down, and that should have been at least ten higher. I took +7.75 on the way up, with some bad luck being bottom ticked out of my 40 long on the retrace, and left a long on from 1945 that is up +19 at the time of writing. Very nice day overall.

What's the takeaway here? Well equities needed a retrace and got one. No technical damage was done and we have a new support level at Friday's low.  Am I still looking for a retest of the SPX highs? Yes, though as with Friday morning, I'm still looking for a decent break and daily close over the SPX 50 DMA at 1957, and a break below Friday's low at 1941.50 SPX would now be a significant warning signal that the bears might be recovering control of this market.

If anyone's interesting in seeing the Princeton Trader trading room in action, free trials are available, and I have a feeling that the next two months or so may well be the most interesting trading months of this year.

For today I think a full gap fill looks like a long shot, though if we get more war rumors who can say? As long as the Friday low holds we should now have started the move that will take SPX to the IHS target at 1987 and the retest of the highs that I have been looking for since the recent lows.