We Are Where We Were

It's been an amazing week, and in effect the first five days after the Brexit vote were all trend days, with ES now kicking around much the same area this afternoon as it was on the afternoon before the vote. What does this all mean? Not much I suspect. The journey to 1991 wasn't the herald of the bear apocalypse that some were expecting, and I strongly suspect that the journey back isn't the herald of the bull rapture that some are now expecting. We'll see how it looks after we see some two way trading return after the long weekend.

SPX broke back up over the daily middle band yesterday and NDX and RUT look likely to do the same today. That opens up targets a bit higher and I've had a close look at the pattern setups on all three on the daily chart.


On SPX the obvious pattern is a megaphone aka a broadening top. I prefer calling these megaphones as they have no directional bias so the other name is rather misleading. The next obvious target within the megaphone is megaphone resistance in the 2125 area. SPX daily chart:

On NDX the obvious pattern is a falling megaphone, and on a break over this test of broken rising channel support the obvious next target is megaphone resistance in the 4510 area. On a break over megaphone resistance the megaphone target would be a retest of the 4574 high. NDX daily chart:

On RUT there is a falling channel formed from the June high that is a likely bull flag on the bigger picture. Flag/channel resistance was being tested at the high today and if SPX and NDX reach their targets I'd expect RUT to break flag resistance and test the first flag target at a retest of 1190 by then. RUT daily chart:

Today looks like to close green as expected and if we are going higher next week I'm expecting to see some retracement first on Tuesday/Wednesday before that happens.

Stan and I are doing our monthly public Chart Chat at theartofchart.net on Sunday and will be discussing the usual very wide range of indices, commodities, currencies etc and taking questions. Lots of interesting turns and trendlines at the moment across a lot of markets so it should be a Chart Chat to remember. The webinar is free and open to all, so if you want to come you can register for that on this page here.

Everyone have a great Independence Day on Monday, and let it be a reminder to everyone that when a country declares independence from a larger group of countries in which they don't feel they belong, while it does result in short term uncertainty, the end result can sometimes be well worth the effort.  :-)