Decision Time - Leaning Short

The big delivery days for subscriber charts at theartofchart.net are Sunday and Wednesday, and on Wednesdays particularly I have been working very late producing them all. As I'm therefore somewhat sleep deprived on Thursday as a result, I suspect that my Thursday morning posts are regularly going to be using a couple of charts drawn from the three or four dozen annotated charts that I produce on Wednesday night.

Yesterday looked superficially good for bulls, but under the surface things were going less well, with 60min RSI 14 sell signals fixing on both SPX and NDX. With SPX and RUT both in fragile looking rising channels that would break down on any significant weakness this morning, the odds of seeing some technical damage early in the session today look good

If we do see SPX retrace today, I'd now be expecting to see a test of rising wedge support with the retracement supported by the 60min sell signals. That wedge support is now in the 1930 area and  rising at about ten handles per day.  SPX 60min chart:

NDX has more room before a break over channel support, but should follow SPX and RUT if they break their channel support trendlines. NDX 60min chart:

Today is a cycle trend day, which means that there are 70% odds that the market will be mostly one sided today. That doesn't mean we see a full trend day today, though I think we might well. I'm looking for an AM high today and then downside for the rest of the day. I'm not going to get too excited about that until the SPX and RUT channels break down. SPX channel support is now in the 1988 area, and RUT channel support is in the 1146 area.

It's important to remember that after the channels break, we may then need a reversal pattern, and that could involve retests of the current rally highs. That's a key reason why buying or selling breakouts just after the break can be a very high risk trade.

Stan and I are doing a webinar an hour after the RTH close tonight looking at Stan's non-traditional wave counts and how these work with my patterns based charting. If you're interesting the signup link is here.