The Second Mouse

On the daily chart the main thing that happened yesterday was that bulls tried to break back over the middle band and failed. Unless that changes quickly then the next obvious target is either the the 50 MA and EMA in the 2100 area, or the triple support/target in the 2082-4 area at the 100 MA, the lower band and rising wedge on the middle rising wedge (mummy bear) of the three bearish rising wedges that I was looking at yesterday morning. I'm strongly favoring that lower target. SPX daily chart:

I've marked out all three of the three bearish rising wedges on the 60min chart below, and rising support on baby bear was broken yesterday morning. There was a strong rally after that which was firmly rejected at the test of the 50 hour MA for the third time in the last four days. Unless that changes the next move should be down. SPX 60min chart:

The short term pattern is either yet another triangle, or a falling channel from 2134.Unless we see a break back up over declining resistance from 2134, the effect should be much the same. I've marked up the higher probability paths from here in my view. SPX 15min chart:

DX has broken rising channel support and formed a small double top. On a sustained break below 96.8 the double top target will be in the 95.75 area. This move would most likely be supportive of both oil and gold. DX 60min chart:

It's been years since equities made a significant high, and many, particular options traders, are getting very tired of waiting for this process to complete. I can offer no comfort there. Topping is a process that takes as long as it takes, and can't be hurried. I'm fairly sure that we are in the late stages, and we may well have already made the high on SPX. I'm still short from 2132 ES and I expect to be trading around that core short for much of the next year. It's important to remember that while the early bird may get the worm, it's the second mouse that gets the cheese. The second example is the one to remember here as it is the nature of tops to punish those that arrive early.