Retesting The Broken 2085 Floor

This has been a strange few days on SPX. Friday and Monday trended down in a very steep falling wedge, and after that broke up at Monday's close, SPX has trended up Tuesday and Wednesday in a very steep rising channel. A retracement of some kind today is likely. The patterns from the lows on SPX, NDX and RUT are unsustainably steep, and the historic stats for the last trading day of June are 70% bearish. Bears need to do some damage with that today though as the historic stats for the first day of July are 80% bullish.

Yesterday's break up through the 5dma put SPX back on the three day rule, and on a close back (at least 2 handles) below the 5dma either today or tomorrow, SPX would then be extremely likely to retest the 1991 low before any retest of the 2120 high. The 5dma closed yesterday at 2051. SPX daily 5dma chart:

There's a very decent looking rising channel on SPX from the lows here and channel support is currently in the 2065 area. A break below opens a larger retracement and a test of the 5dma. SPX 15min chart:

NDX in a very nice rising wedge from the low. Support broke slightly after the open today so should be in a topping process. NDX 15min chart:

Decent rising wedge from the lows on RUT. Wedge support currently in the 1126 area. RUT 15min chart:

The SPX daily middle band at 2081 is main resistance today and that has been tested as I've been writing. Slightly above is the key 2085 level which was the established floor before the Brexit break down and the HOD so far is an exact test of that at 2085.23. On a break above and conversion to support today the bear side are likely finished both today and tomorrow. Support is at the 50 hour MA and the 5dma, currently at 2061 and 2045 respectively.

Running the Fibs

I said on twitter last night that the obvious next target on SPX was a retest of the 2050 area, and we have seen that at the open. That area is broken support at 2050, with the 50% fib retrace of the decline at 2052, and both are a match with the ES weekly pivot at 2045.5. SPX has gone a bit over there this morning. If that can be converted to support then that would open up a test of the 61.8% fib retrace target at 2067, which is a decent match with the ES monthly pivot at 2063. If 2063/4 ES is converted to support that opens up a test of the daily middle band on SPX, which closed at 2083 last night, but at that point doing any lower lows under 1991 will be looking doubtful.

What about the fundamentals and the Brexit shock? What about them? I don't think the Brexit news is that important in itself, and that being the case, it only remains important as long as the market thinks it is. That could end at any time and may already have done so. What might be bigger news, and this could happen at any time, is if a Eurozone country, or more than one, announces their own referendum. That would be potentially very important news indeed, as the contagion from the Euro breaking up, which seems likely at some point in the next few years, could force many of the Eurozone countries to default on their sovereign debt, and that could make a significant part of the international financial system insolvent. No such referendums are planned yet though and it may still be a year or two before we see the first one. As and when we do see one then the vote is likely to be influenced significantly by the almost certain sovereign default that would follow for the majority of Eurozone countries if they were to leave the zone.

On the SPX 15min chart resistance is being tested now, and there is a typo on the chart below where it should read that channel resistance closed at 2057 last night rather than 2052. SPX 15min chart:

If the ES weekly pivot is converted to support this morning then I have a possible IHS target in the 2056 area but the next big target would be the monthly pivot at 2063. ES Sep 60min chart:

The higher this goes the less convincing the case for lower lows becomes. As long as this 2045.5 ES area / 2052 SPX area isn't converted to support the case for lower lows is good. After that I'd be thinking 30% into the ES monthly pivot. Over that I'd see the odds at 15% or less. The best shot at lower lows is an AM high that fails hard today.

Retesting Broken Support

All of SPX, NDX and RUT formed tight falling wedges from the pre-Brexit highs and all of them broke up yesterday before the close. I called the long on the member only twitter feed at theartofchart.net and that was a very nice rally into the open today. So what now?

Our main scenario is looking for a rally into, and fail at, the 2020-30 area. The current HOD is nicely in this area and we are looking for a hard fail here into a lower low below yesterday's low. If seen that would be supportive of a possible break below the 50% fib retrace target in the 1965 area towards the 61.8% fib retrace target in the 1930 area. If we see a sustained break above 2030, then that will open up a possible retest of broken double top support at 2050 and 5dma resistance currently in the same area. SPX 60min chart:

On ES I have resistance in the 2015 to 2025 range. ES Sep 60min chart:

I don't think this retracement low is in yet and ideally we see an AM high here that fails in the right area into lower lows. There is a much better chance of a more significant low at that lower low into at least a larger rally. This tape remains very whippy so if this isn't your kind of tape then there's no shame in sitting this out.

Stan and I are doing our monthly public Chart Chat this Sunday July 3rd and will be looking at all the usual 30 or so trading instruments including SPX, ES, NDX, NQ, RUT, TF, DX, CL, GC, ZB, NG, SB, EURUSD, NZDUSD, GBPUSD, JPYUSD and numerous others. We'll also be taking questions. This webinar is free to all and if you have any interest in world class TA, or where the prices of tradeable instruments may be headed then you should attend. You can sign up for that on this page here.

Brexit Follow-Through

I've had some very surreal conversations about Brexit over the days since the unexpected vote to leave. One of the sane questions that I was asked was why the UK would delay invoking Article 50 to start the exit process, and the answer is obvious of course. France particularly is terrified that if there was to be a referendum in France then the result would be a 'Frexit', as the EU is even less popular in France than it is in the UK. France are therefore threatening to economically punish the UK harshly for leaving the EU, to discourage others, including themselves, from following the UK out. For the UK to invoke Article 50 before negotiating the broad strokes of an exit with that threat on the table, would be to allow France free rein to try to carry out that threat, while the UK had sacrificed the option of not leaving if the terms were too harsh.

There is increased uncertainty until Article 50 is invoked but this is a very uncertain process. It is not yet certain whether there will be another Brexit referendum, who would win that referendum if a vote is held, and what terms the UK would be leaving, in the event that the UK does actually leave. Only the hostility of the French seems assured at this stage, and with them this hostile, it's hard to see the UK being stupid enough to surrender any bargaining chips that they might very much need later to protect themselves.

Back to the markets and we are seeing the Brexit low on SPX taken out with some confidence today and at the time of writing SPX is close to the first alternate double top target that I gave on Friday morning at 1987. The other is a bit lower at 1980 and the 50% fib retracement of the move up from the February low is at 1965. Each of these areas has a shot at being an interim low for a rally in my view, but as the day looks firmly like trend down at the moment there may be no decent long opportunity today before the RTH close. SPX daily chart:

I posted three significant support trendlines on ES, NQ and TF on Friday morning, and the ES and NQ trendlines have now broken. TF support is being tested as I write. Very interestingly at the close on Friday I also had three strong support trendlines established at Friday's lows on SPX, NDX and RUT, all of which were obvious bull flag setups. I was saying in the member chart chat at theartofchart.net this morning that that meant one of two things. Firstly it might mean that the downtrend was about to end early, but more usually in these circumstances, it would mean that when these flags broke down then they would strongly support the topping patterns that were also breaking down. On SPX this means that the larger double top target at the 61.8% fib retracement area at 1930 may now be in range, though I'd be looking for decent support there if tested. SPX 60min chart:

This is angry tape so best to trade with caution. At some stage soon Stan and I are expecting another face ripper rally but unless we see some strong evidence of two way price action it's best to avoid all counter-trend trades on trend days. If SPX starts making short term highs and lows then we may well see a rally that may run 50+ handles.

UK Independence Day

Much to everyone's surprise, including mine, the Brexit campaign won the UK referendum by a healthy margin and it seems the UK is starting down the road to leaving the European Union. There were big reactions overnight on the markets, and much gloom voiced and written about the danger and the instability of the Brexit, but personally I think it's a good thing, and if you believe that it's always better to stick with the devil you know, then I'd suggest perusing the writings of the US founding fathers for a series of opposing opinions. Change sometimes works out ok, and it's worth remembering that the only situation for humans that is ever really stable, is death, which is a high price to pay for certainty. Any good outcome always involves taking a risk. :-)

Moving onto the markets SPX broke back over the daily middle band with confidence yesterday and on the day after that happens, if that is a false break, then there will be a rejection candle that will retrace most or all of the breakout candle. Obviously we'll likely see one of those today. There is now a double top in place that would have alternate targets in either the 1987 or 1980 areas on a sustained break below 2050, which I would note has not been broken yet in RTH. SPX daily chart:

On the futures charts I'm posting all three of this morning's bonus charts of ES, NQ and TF for subscribers at theartofchart.net, because all three made globex lows at very significant levels that could limit further downside. Coupled with Brexit in my view being a storm in a teacup from a fundamental perspective, that is a serious concern for seeing further downside here, and raises a possibility that the main reaction low has already been made in globex. I'm leaning towards more downside, but watching this carefully.

ES Sep 60min chart:

NQ Sep 60min chart:

TF Sep 60min chart:

Even if the reaction low has already been made in globex I'd be expecting to see at least an attempt at a retest of that today. Today is liable to be whippy and if you struggle in very volatile markets it would probably best to leave this tape until Monday. Everyone have a great weekend :-)

Gapping up on Brexit Polls

The markets have been moving significantly on every new Brexit poll and moved up hard overnight on polls showing that the Remain camp now have a clear lead. My working assumption all along, as I've mentioned regularly, is that Britain will vote to stay out of fear of change. The status quo generally has the edge on these kinds of referendums for that reason.

This gap up may mean that closing resistance at the daily middle bands on SPX and RUT may break today, if bulls can sustain the move into the close. We'll see whether they can but regardless of that, when there is a likely Remain victory overnight tonight there may well be another big gap up that could well have more staying power.

The pattern setups are clearer on the futures charts because these include the globex move, and so I'm using the ES, NQ and TF bonus charts that I posted for members at theartofchart.net this morning below to show the possible patterns developing on ES and TF, and the NQ IHS that has now broken the IHS neckline on NQ.


ES Sep 60min chart:

NQ Sep 60min chart:

TF Sep 60min chart:

We could see some strange tape across multiple markets today, so don't feel the need to trade this. Brexit will be out of the way soon enough, and the markets will still be here afterwards.

My appeal for assistance in tracking down the hacker of theartofchart.net met with a good response and we have received a picture of a man who fits the profile of our hacker, and could be our guy. We don't have a confirmed name or address yet but we have unconfirmed reports that his first name may well start with a 'J', and that he may be posing online as an institutional trader to cover his real activities as a troll and minor league hacker. We are appealing for more information to help identify this menace to society. :-)

Three Day Rule - Day Three

I've been watching the coverage of this month's potentially market moving crisis du jour which is the Brexit campaign. How long will this remain 'important' even if the Brexit camp wins? That's hard to say. Anyone remember Ukraine? The campaign has been funny in places though, I thought the concern that Britain's growth prospects might be damaged long term by leaving the slowest growing region in the world was particularly witty, though that may not have been intentionally the case.

How does that impact trading this week? Well I think the Remain camp will most likely win the vote. The status quo always has a big advantage in this kind of poll and fear of the unknown is a potent message, even if uninspiring and suggestive that there is no positive message to sell instead. As you can see from the video below (thanks to @busculture on twitter for sending me this), the Remain message hasn't really changed since the last Brexit referendum in 1975. They won then, and they'll likely win now. That should favor the bulls at least initially. Crisis du Jour:

SPX is on day three of the 5dma Three Day Rule. That means that if SPX closes significantly (2 handles plus) below the 5dma today then we would be highly likely to see a retest of the 2050 low before a retest of the 2120 high. The 5dma opened in the 2082 area this morning. On the upside we had a rather confused looking bull flag with a target back at a retest of Monday's high and that is making target at the moment. What bulls really need to deliver is a daily closing break over the daily middle band, which opened today at 2094. If seen they then also need to avoid a reversal candle tomorrow that rejects that break. SPX daily 5dma chart:

There's not much around in the way of directional targets or patterns here but I do have a possible IHS forming on both NQ and NDX that would target a retest of the last high on a break up. That hasn't broken up yet but a sustained break over the 4437 area neckline would look impressively bullish. If that pattern is going to break up, I would expect that break today, so we'll see. NQ Sep 60min chart:

So far this has been a good week to go fishing, but the tape has been compressing here, and we are likely to see a break up or down soon. In the bull corner there are still open 60min RSI 14 buy signals on SPX, NDX and RUT, and the UK will likely vote to remain on the EUs ship of gently rotting zombie economies, which is good news, kinda. On the bear side there are still open daily RSI 14 sell signals on SPX and RUT, the daily middle band has been tested on both on Monday and Tuesday and held both times, with NDX not even getting as far as that test, and SPX has been testing broken main rising channel support so far this week, which is decent resistance that has held so far. May the least apathetic side win!

In other news I'm sure that some of you are aware that theartofchart.net has been hacked repeatedly since Sunday, though that seems to have stopped for the moment and the security hole at Wordpress may have been fixed now. We are trying to trace the hacker and I would like to appeal for help in this search to add to the information that we have managed to glean so far. All we have so far is a profile that tells us that we are likely looking at a white male between the age of 12 and 40, with a tiny penis that has not been detectable since the hacker's weight rose over 350 pounds, and living in his mother's basement. If anyone reading this has any information that would help us work up this information into a specific name then please come forward. We have been assured of a claim on the hacker's assets, which we are offering as a reward, so there could be three broken keyboards, a half eaten pizza, and an old stool sample in it for anyone who can help us to track down this dangerous menace to society. :-)

Mañana

My apologies for the late post, I had a busy morning and I'm not really in the mood today. So far it seems that SPX is feeling the same way, though it is likely compressing for a move to break up or down either today or overnight.

Bulls didn't follow through on the very impressive opening gap up yesterday morning and lost potential support at the daily middle band, now at 2092, before the close, so there has been no daily closing break back above very important resistance at the daily middle band. With the current HOD at 2091, that resistance hasn't even been significantly threatened so far today.

What was definitively broken at the close yesterday was resistance at the 5dma, and that puts SPX back onto the Three Day Rule, so if SPX closes significantly (2+ handles), back under the 5dma, currently at 2078.5, either today or tomorrow, then the statistics would very strongly favor a retest of the last low at 2050, and highly probable lower low, before any significant subsequent move up would begin. On a closing basis the daily middle band is key resistance today, and the 5dma is key support, and they aren't separated by much, though at the pace the tape has been moving since yesterday morning, fourteen handles still seems like a long way :-) SPX daily 5dma chart:

From a trendline perspective the distance between support and resistance is a bit smaller, with resistance on the falling channel from the 2120 high currently in the 2097 area, and support from the rising channel established from last week's low at 2087 (broken as I've been writing). A break of either would be a provisional directional call that would require confirmation with a daily closing break of the key daily closing support or resistance level at the 5dma or daily middle band. SPX 60min chart:

This last chart is just for academic interest really. I mention regularly that patterns often evolve into larger patterns, with the most frequent examples being rising or falling wedges evolving into channels. There was a remarkable example of this happening intraday on the 1min chart yesterday, with a succession of four decent bull flag patterns growing into each other over the course of the day from the AM high. These were all decent quality patterns and the final one has broken up today with a minimum target at a retest of yesterday morning's high at 2100.66.

How seriously am I taking this bull flag? Not particularly as I've never seen this flag setup happen before, so I can't remember what happened on any previous examples, and to evolve through so many flags conveys a certain lack of conviction. A good example of what I mean is when the support trendline on the CL rising wedge was retested a couple of weeks ago. In that instance the second test as support without first returning to wedge resistance added conviction to a strong bounce, a third test (which was seen) was starting to look worryingly overenthusiastic, and a fourth test would likely have broken the support trendline. SPX 1min chart:

The rising channel from last week's low has broken down while I've been writing, and that favors the bear side somewhat. What the bears need here is a break back under the 5dma at the close, ideally today, but otherwise tomorrow, and what the bulls need is a clear break back over the daily middle band that is not rejected with a reversal candle the following day. With the action so far this week it's getting a little hard to see either side doing much exciting, and with July 4th coming up this is low volume tape, but this should be heading into some expansion of the range soon, as listless as this tape seems at the moment.

Until the falling channel from 2120 and the daily middle band break up SPX is trading just under serious resistance, so while this could break either way, the risk/reward on short trades here is obviously better.

Candidate Breakaway Gap

My last tweet of the week on the theartofchart.net member twitter feed on Friday was a comment that the close was modestly bearish, but with a risk of a breakaway gap up at the RTH open today, and here it is.

Today is all about a test of strong resistance at the retest of broken rising channel support and the daily middle band at 2089. This is a daily closing basis test, so we could see a break above intraday, but any intraday move over 2095-2100 SPX would suggest a likely break up.

If SPX fails here then fills the opening gap then we should see a retracement low under 2050. If SPX breaks resistance then the current swing high at 2120 should be retested, and may well break into a test of the all time high at 2134. SPX daily chart:

One thing I'm watching with interest here is the strong RSI 14 buy signal on the SPX hourly chart. After the open today that is still some way short of the possible near miss target, and that is also suggesting a break back up today, though I'll be keeping an open mind. SPX 60min chart:

Obviously this may be a heavy news week and that isn't going to make trading the days into the Brexit referendum easy. We'll see how today develops.

2085 Still The Level

Running late today so I'm using the ES, NQ and TF futures charts that I posted for subscribers at theartofchart.net this morning.

SPX went to the 2050 target that I mentioned yesterday morning and found support there, rallying powerfully enough from there to break the declining resistance trendlines on SPX, ES and NQ, but not RUT. Is the retracement over? Maybe, but if so then SPX needs to confirm with a break back over support turned resistance at 2085. The other significant resistance levels to watch today are daily closing resistance at the 5dma (now at 1975), daily middle band (now at 2089), and hourly resistance at the 50 hour MA, also at 2089.

ES Sep 60min chart:

NQ Sep 60min chart:

TF Sep 60min chart:

Yesterday's cycle trend day was a V day in effect in the end. Today is the other cycle trend day this week and should be interesting whichever way it goes. Everyone have a great weekend :-)

Stan and I did a free educational webinar yesterday on trendlines, partly because I see a lot of very poor quality trendline work around, so if you start a lot of your trendlines away from the high or low of the previous trends, or you use a lot of log charts with trendlines, then I'd suggest you watch it for what I'm saying in the webinar about proper trendline construction and scaling. You can see the recording of that here. If you want to see examples of trendlines that I have drawn in the past then there are must be somewhere between 20,000 and 100,000 on the charts in the post history at my blog at www.channelsandpatterns.com. Also a lot of patterns drawn correctly there as well of course.

So Here We Are

Yesterday played out as expected, with the intraday high as expected at 2085, at the retest of broken floor support and the daily middle band, and ES has made lower lows against Tuesday's lows overnight. I'm looking lower again, though there are now possible double bottom setups on all of ES, NQ and TF, and on a break back over 2085 SPX the retracement low would likely be in.

On the 15min chart a decent falling channel was established at yesterday's high, and channel support is currently in the 2050 area, though obviously that's dropping fast. Short term support is at the 61.8% fib retracement of the rising wedge from the 2025 low at 2062. SPX 15min chart:

Support on the daily chart is at the daily lower band at 2039, possible double top support at 2025, and the 200dma at 2016. The minimum retracement I would normally expect after a channel break like the one we have just seen is at the 38.2% fib retracement of the thrust up from the February low at 2001, and the double top target on a sustained break below double top at 2025 would be in the 1930 area, just above the 61.8% fib retrace target at 1929. Does this mean that I'm no longer expecting a new SPX all time high soonish? No, I'm still expecting that, but SPX may need to retrace to that 1930 target first. SPX daily chart:

Looking lower on ES, but as I mentioned, there is a possible double bottom setup here. ES Sep 60min chart:

Today and tomorrow are both cycle trend days. If SPX is doing requests, then mine is a trend down day today into a target in the 2025-40 area, then a trend up day tomorrow to retest yesterday's high at 2085 and possibly go higher. That would generally start with an AM high this morning, and as I write there is a promising little nested double bottom setup on ES that may deliver a retest of obvious resistance at the monthly pivot at 2064.5 (2073/4 SPX area). We'll see how that goes.

Stan and I are doing a free educational webinar tonight at theartofchart.net on drawing and trading with trendlines. Being able to draw a decent trendline is very important for assembling patterns and trading with them, and decent trendline work is strangely rare, so if you would like to see how Stan and I do them, you can register for that webinar on this page here.

I was asked where I stood on Brexit yesterday and in case anyone is interested I'm posting the text of an email that I sent to a family member on the subject this morning, with the link to the article I was talking about here. Also a useful read if you are wondering why there is so little affection for the EU in the UK. Email text as follows:

'Hi (pro-EU family member)

You've sent me quite a few articles on the Brexit vote, and when I read this I thought of you. Both articles well worth reading, but the second one, by Ambrose Evans-Pritchard, a lifelong europhile, explaining why he's voting for Brexit, particularly so. 

There's something else to mention too. Almost everything I've seen from the Remain campaign has focused on the dangers of leaving Europe, of the negative economic impact of leaving the EU (though that's actually hilarious given that the EU is the slowest growing big region on the planet, and has been for a while now since being overtaken by Africa). While they may have some decent points, and the unknown can be scary, it does also tell us that even they can't really think of much to say about the advantages of being in the EU. If they could then fear of the unknown would not be the main plank of their campaign. If this referendum was about joining the EU rather than leaving it, then it would be hard to imagine them getting many votes at all with this campaign, which might reasonably be compared to trying to scare a battered wife into staying with an abusive husband for fear that the alternative might be even worse. 

I'm not criticising them for that, I can't think of much to say about the EU that is positive either, and neither can our europhile friend Ambrose below, as he details the main ways in which the EU has failed to deliver for the citizens of the member states for a variety of reasons centred round arrogance, complacency, lack of accountability, and a very deeply held contempt for the democratic process. 

Food for thought :-)

Richard'

Retesting Broken Support

SPX 60min RSI 14 and RSI 5 buy signals fixed at the close last night, and the various decline patterns on ES, NQ and TF all broken up overnight. I suspect strongly that this is a rally before another leg down and if so, then the resistance levels that I'm watching here are the retest of the daily middle band from below at the broken floor at 2085, then the 5dma in the 2095-7 area that should be bolstered by the 50 hour MA as well if reached. If that area gets turned into support then the retrace from the highs is likely over.

On the SPX daily chart main rising channel support from the Feb low was broken at the open yesterday. That was an important break and opens up what may be a much deeper retracement. On a sustained break below the last serious low at 2025 the double top target would be in the 1930 area, which would almost exactly be a 61.8% fib retracement of the rising channel from the February low. After yesterday morning's break that possible retracement target is in the mix now. SPX daily chart:

The falling megaphone from the high on ES broke up overnight. There is an open 60min buy signal that is suggesting that the rally has further to go than the 2075/6 test seen so far. ES Sep 60min chart:

The big news today is the Fed at 2pm. I think Yellen is going to make a statement and I'm going to take a flier and predict that whatever she says will lean dovish. That's the wild card today though so be aware of that when the time comes.

Stan and I are doing a free to all educational webinar on trendlines at theartofchart.net after the close tomorrow. Among other things we will be talking about the correct way to draw and place trendlines, and based on charts that I see posted around the web, there are a lot of people that could benefit from that. If you'd like to attend you can register for that here.

Mind The Gap

SPX broke support yesterday at the established floor at 2085, supported by the 38.2% fib retrace target and the daily middle band at the same level. SPX closed the day just above the  test of double support at main rising channel and 50dma support in the 2076/7 area, and has gapped through that support at the open.

This is a potential breakaway gap through important support and what I'm watching closely here is whether that potential breakaway gap fills. If it does then this is just a break of the channel, which opens up lower targets but no more. If that gap doesn't fill then it may well not fill until we have reached the obvious targets below, and we may then be reaching the ideal 1930 target area a lot faster than I was expecting. We'll see how that goes today. If the gap does fill then the daily middle band at 2084/5 is now important daily closing resistance. SPX daily chart:

There are a lot of open buy signals here and as long as that breakaway gap fills, I'm expecting a decent rally soon without going too much lower. Stan is looking for some support in the 2050 ES area (~2060 SPX), close to the 61.8% fib retrace target on SPX at 2062.  If it goes lower I'd note that the daily lower band is currently in the 2034 SPX area. ES Sep 60min:

The possible breakaway gap has filled while I've been writing so that's no longer indicating a possible and immediate extended decline. I'm looking for a likely rally soon and on a sustained break back over 2085 that may be in progress now. Otherwise I'll be looking for support in the 2062 SPX area.

Bullish Stats This Week

The decline on Friday didn't quite make the obvious targets on SPX and RUT, though the initial H&S targets were both made. The obvious target on SPX would be a test of established support and the possible H&S neckline at 2085 and that may be tested this morning before the strong rally that looks very likely to come soon afterwards.

On the SPX 15min chart both RSI 14 and RSI 5 sell signals had fixed by the close on Friday. SPX 15min chart:

If we see a rally either from the current low at 2089 or a bit lower then the obvious targets would be a retest of the 2106-10 area to retest the 50 hour MA and 5dma from below and make a possible right shoulder on an H&S, or on a break above a retest of the current swing high at 2120, then a marginal new all time high above 2134. Stan and I are leaning towards the third option here, though it could go another way. SPX daily chart:

One other thing that is also leaning towards the third option is the 60min buy signal that fixed on ES overnight. There are also now fixed 60min buy signals on NQ and TF. ES Sep 60min chart:

The stats for this week are bullish, with the most bullish stats tomorrow and Wednesday. We should see a rally start today from here or not much lower and that may well make the final high for this run up from the February low. If SPX, NDX and RUT can then break their support trendlines from the February low, we should see a strong retracement with a target on SPX in the mid-1900s before, most likely, going higher.

Stan and I did our monthly public Chart Chat webinar yesterday talking about these and DX, CL, GC, ZB, NG, SB, TLT, GBPUSD, JPYUSD, DAX and others, and if you'd like to see that the recording is posted on our June Trader Education page at theartofchart.net.

All Fall Down

I was talking yesterday morning about the fragility of the uptrend and mentioned that the support trendline on RUT broke yesterday at the RTH open. The SPX rising support then broke as well but ES rising support held yesterday. Overnight though that has failed as well and all of ES, NQ and TF have now broken down from clear topping patterns. I've given those prices on the charts below and I'm expecting all of those pattern targets to be reached, though not necessarily today.

I'm posting all of the bonus charts that I posted for subscribers at theartofchart.net this morning. These are the ones that I posted every trading day there and they are ES, NQ, TF, DX, CL, GC and ZB, with additional charts for NG and SB posted on Monday mornings. If this service is of possible interest I'd suggest that you compare today's charts with the ones I posted last Friday and you can find those here. I suspect that you'll be impressed. If you aren't impressed then you should be. If you want to see these every morning these are bundled in the Daily Video service and you should sign up for that sooner rather than later, as the price for that will be rising sharply at the end of June, and that price increase will not be applied to anyone who subscribes before then, as long as they maintain a continuous subscription. You can sign up for that here.

It is also bundled in with the Chart Chat service, and there are no plans to raise prices for that anytime soon. We do a free Chart Chat webinar every month and June's is being done on Sunday. We will be covering the usual wide range of instruments with asides into other markets if we have questions about them or they look interesting. All are welcome and there is no charge. You can register for that webinar here.

ES Jun 60min chart:

NQ Jun 60min chart:

TF Jun 60min chart:

DX Sep 60min chart:

CL Jul 60min chart:

GC Aug 60min chart:

ZB Sep 60min chart:

Today is a cycle trend day, and there are a lot of very attractive pattern targets that have not yet been reached. We may well see all of those topping pattern targets reached today. Everyone have a great weekend. :-)

Still Watching the Wedges

We didn't see a support test on either of the SPX or RUT wedges yesterday. SPX made a new swing high under wedge resistance and RUT overthrew that resistance slightly. SPX has come close to a test of wedge support at the open this morning, but needs just a little lower to hit it. SPX 15min chart:

After yesterday's bearish overthrow RUT has broken wedge support this morning. This puts RUT in a likely topping process and means that a short term high should be close. RUT 15min chart:

If we have already made the short term high, then ES should tell the story. Support is at yesterday's low at 2106.5 and rising support is in the 2105 area. On a break below both the double top target would be in the 2093/4 area, just under the weekly pivot at 2095.7. ES Jun 60min chart:

This uptrend is fragile, with a lot of negative RSI divergence across multiple timeframes. I'd like to see a new all time high on SPX before the next retracement, but the uptrend may fail below that and there are at least some signs that it will. We'll see how that goes today.

Watching the Wedges

The November 2115 high was broken yesterday and that was a very significant technical break. The open island top gap on NDX hasn't filled yet, but I'm expecting a retest of the ATH at 2134 SPX sooner rather than later now.

Short term though, I'm still watching the wedges from the last low on SPX and RUT. Both had perfect reversals at wedge resistance yesterday with 15min sell signals fixing afterwards. The obvious next target within the wedges is at wedge support, which closed yesterday on SPX in the 2102 area. I'm watching with great interest to see whether that gets tested this morning and if so, whether there is a strong reversal back up from there. SPX 15min chart:

On RUT rising wedge support closed yesterday in the 1175 area. RUT 15min chart:

On ES there is an open 60min sell signal that fixed at the RTH close yesterday. That should be good for a retest of the overnight low at 2106. We'll see whether it delivers. ES Jun 60min chart:

Why are the wedges important? Well if these wedges are still forming, then regardless of yesterday's bull break then there should still be a decent chance of a retrace coming soon, particularly if the SPX all time high at 2134 is tested within the SPX wedge. If the wedges are still forming then we should see a test of wedge support before significant further upside on SPX. If SPX and RUT break up hard instead, then a retracement starting soon becomes a lot less likely.