Noli Illegitemi Carborundum

I'm having a theme of latin post titles so far this week, though I'm sure that some of you will know that unlike the last two, the sentence I'm using as the title today is joke latin rather than the real variety, and I'm using it as a description of what we have been seeing on equities here as bears waste their window of opportunity to deliver a correction in price here rather than just a correction in time.

It has been a while since I last posted here the bonus charts that I do every day for Daily Video Service subscribers at theartofchart.net on various futures every night (with update notes before the RTH open the next day). Given that equities seem so determined to be boring here, this is a good opportunity to show how interesting everything else is looking. I've added the overnight updates as well.

ES consolidated sideways overnight. We are leaning towards a lower low before a break up. Leaning bearish today and likely bullish tomorrow. ES Sep 60min chart:

NQ consolidated sideways overnight. looks like a bear flag. If we see a sustained break below H&S support then the bears might manage to deliver a decent day today. NQ Sep 60min chart:

TF also consolidated sideways overnight. Short term rising support in the 1243 area. TF Sep 60min chart:

DX still making marginally higher new highs and lows on increasing negative divergence. Major resistance on multiple timeframes in the 96.3 to 96.6 range. A break over 96.6 is likely a bullish break that would follow through. DX Sep 60min chart:

CL has almost retested the retracement low overnight. possibly close enough but may need a marginal lower low. CL Oct 60min chart:

GC has hit the 1307 target overnight and the retracement low may now be in. A possible 60min buy signal is now brewing. GC Dec 60min chart:

ZB broke down slightly from the triangle overnight and has now broken up. We should see a retest of the 170'23 high and maybe higher. We should not see a break over trendline resistance in the 171'15 area before the next leg down begins. ZB Dec 60min chart:

NG may be finishing the retracement and a possible 60min buy signal is now brewing. The next leg up should deliver new highs and on that break up I would have a bigger picture IHS target in the 4.5 area. NG Oct 60min chart:

If the bears are going to impress then they really need to deliver a decent decline today. Tomorrow I'll be looking at resistance trendlines above that I'll be watching for the next leg up on equities that will be starting in the next week or so. On SPX and RUT particularly, those trendlines are not far above, so I'll be looking at possible alternatives.

Stan and I are doing our monthly public Chart Chat on Sunday and all are welcome. Everything except equities is looking very interesting here so there is a lot to look at. You can register for that here.

Tempus Fugit

Apologies for the very late post. I'm reorganising my schedule to make it easier to get these posts out before the market opens, which I'm hoping will make keeping up with everything easier.

Another painfully slow afternoon on SPX, and the window to see a decent decline here is grinding by. So far SPX is holding the 50 hour MA at 2179/80 as resistance, and the close today was below the daily middle band at 2179, so yesterday's minor break above was negated. The downside scenario hasn't been killed off by bullishness yet, but I'm concerned that time is running out. SPX 60min chart:

SPX 1min chart:

I'm wondering about a triangle here. Yesterday was a lower high and today was a higher low. If this is a triangle then as and when it breaks it would likely break up into at least a retest of the high. Bears may get another try tomorrow, but if we see a break over 2183.48 at this stage then we might well see a retest of the all time high, and very possibly higher. If that happens then this very boring tape may extend well into September

Carpe Diem

The SPX high window closed on Friday, SPX filled the open breakaway gap at 2164.5 and SPX closed under the daily middle band on Wednesday through Friday last week. We should see a decline here, though I'm concerned that this is all taking too long, and the next low window at the start of next week isn't moving back. If SPX is to make my target trendline in the 2080 area then it needs to get moving. Otherwise there's a possibility that we see a smaller decline and spend September just gently topping, which would be a much less interesting alternative. SPX daily chart:

The historical stats today lean bullish and lean bearish tomorrow. I'm using the 15min charts that I did for SPX, NDX and RUT last night for subscribers to the Trader's Chart Service at theartofchart.net. I was looking at rally targets in the 2178-81 area when I did these charts last night and we're testing that area now. The 50 hour MA at 2181 needs to be decent resistance here, and SPX needs to close under the daily middle band at 2177/8 today. A sustained break over 2181 would be a concern as it would invite another possible test of the all time high. SPX 15min chart:

NDX hasn't quite reached the 4800 area target I gave and might need to. NDX 15min chart:

RUT is more than halfway back to megaphone resistance. Bears need a reversal soon and a break down ideally as otherwise this setup very much suggests a high retest. RUT 15min chart:

Bears should be in the driving seat now and I'm hoping they get moving seriously today, or tomorrow at the latest. On a sustained break back over 2182 SPX and conversion to support we could still see yet another high retest. Until we see that though, SPX is currently testing the likely HOD area for today at that resistance.

Down In The Hole

A big news day today with Janet Yellen talking about the Fed's future plans to improve the stability of the financial system. Doubtless she will once again be reaffirming the Fed's complete commitment, having dug a vast economic hole with overly loose monetary policy and low interest rates since Greenspan's appointment as the Fed Chairman almost thirty years ago, to keep on digging using the same tools until that hole has entirely disappeared. Obviously we should all hope that the Fed's efforts doing that in the future are more successful than they have been in the past.

SPX tested and held support at 2168.50 overnight and there is an obvious setup to rally up to what would likely be triangle resistance just under the last high. That might be derailed by news from Jackson Hole of course but 60min buy signals fixed on all of the ES, NQ & TF 60min charts yesterday and that's looking good at the time of writing. ES Sep 60min chart:

The setup on NQ is very similar to ES. NQ Sep 60min chart:

The rising wedge on TF is the key there. If ES makes a marginal lower high we may well see TF make a higher high into rising wedge resistance. TF Sep 60min chart:

I'm wary today in front of the potential news bombs from Jackson hole. That's unlikely to change much on the bigger picture but the tape might be much more random today. We shall see. everyone have a great weekend. :-)

There's No Rushing These Things

Stan's on holiday this week (as well as last week) and I'm minding the shop at theartofchart.net, so I've been more underwater than usual. I try to get these posts out in the morning but that's not always possible. Apologies for this particularly late one.

Bears had a good day yesterday and the marginal swing high that I was looking for was not made. Does this mean that this seemingly eternal topping process is finally done? Well no, but it's a step closer to finished. As I mention regularly, there's no hurrying these things and topping processes particularly can test the patience of even the most experienced traders. It's coming, and coming soon, but there's still more to do as I'll show below.

All the charts today are the ones I did last night for subscribers to the Trader's Chart Service at theartofchart.net, though for the last two I've updated them to show the price action this morning as well.

On the daily chart the close was a marginal 2.5 handles below the daily middle band yesterday. The daily middle band is at 2178 at the time of writing and the bears would like another close below today that would ideally be at least 4 handles below. SPX daily chart:

On the SPX 15min chart I was writing last night that bears needed to break under 2168.50 double top support to eliminate a possible triangle option here. They haven't managed that yet today and at the time of writing I'm not that optimistic about seeing that today, though the bears have definitely not lost that battle yet. If they can break that 2168.50 SPX level then the swing high should be behind us. In the absence of that break the triangle option would strongly suggest that a last new high is still needed. SPX 15min chart:

On the RUT 15min chart I was saying that wedge support need to be tested at 1234/5 and we duly had that test this morning. That confirms a high quality rising wedge, but obviously that wedge support will still have to be broken to open up the downside. RUT 15min chart:

If I was a teacher writing a school report here, then I might well be saying that Ursus Jr had made a promising start to the move, but that more effort will be required, and that there are some significant milestones ahead that will need to be reached to take young Ursus where he wants to go. We'll see what he can do next :-)

While we are waiting the tape is getting more interesting at least. It should be a lot more interesting soon, but we're not quite there yet. Soon.

It's Just One Wafer Thin Mint Monsieur

SPX retested the ATH as expected yesterday, but made a marginal lower high, as did NDX, which I wasn't expecting. An acceptable double top setup has formed, and if we now see a daily closing break break below the daily middle band, currently at 2178, then this swing high is likely in.

Until we see that though I have a possible and nice looking rising wedge on SPX and the next obvious target would be wedge support in the 2181.75 area (NOW BROKEN SLIGHTLY). That is a possible target for an AM low today and then a marginal new high to set up the second and smaller of nested double top patterns here. SPX 15min chart:

On ES the possible wedge support trendline is a little lower in the 2179 (NOW BROKEN SLIGHTLY) area, and that is a match with the weekly pivot support of course, as well as a small H&S target at 78.75 that I called on the subscriber twitter feed for theartofchart.net before the close yesterday afternoon (TARGET NOW MADE). ES Sep 60min chart:

The two trendlines have now been broken slightly, but if we are going to see an AM low today then that's still the obvious place. A reversal there may well deliver a marginal new high on SPX in the 2194-99 range to finally make this swing high before that 4%+ retracement I have been talking about since early August. I have mentioned a few times though that it's best to be patient waiting for these tops to form and we've definitely had to be patient waiting for this one. This topping setup finally looks almost cooked and ready to serve. The next step is ideally to feed SPX this final wafer thin mint of a high and then watch for rejection at the minimum safe distance. Let's see how that goes. :-)

The Battle At The Bands

Yesterday started off as expected, but the move down stalled at the daily middle band, and then that held on repeated tests for the rest of the day. I was saying last night on the daily video update for subscribers at theartofchart.net that the support there three of the last four days was favoring a retest of the daily upper band at 2194/5 next, and that the possible H&S patterns forming on SPX, NDX & RUT were now much less likely to deliver. On a retest of the ATH, which we are seeing now, then I'd be looking for a marginal new all time high in the 2194-2200 range, that should not break the resistance trendline now at 2200. I would expect that marginal new high to be the swing high for the current move up, and for that to hold for three or four weeks. SPX daily chart:

I'm added the ES, NQ & TF charts that I posted for members at theartofchart.net this morning, and I have updated all of those to show the now likely double top setups rather than the H&S setups that had been forming. ES Sep 60min chart:

NQ Sep 60min chart:

TF Sep 60min chart:

SPX is now past the middle of Stan's cycle high window and the setup is all there to make a decent swing high today. I'll be looking for that 4%+ retracement from that high and then at least a retest of this high on the next swing up.

I Don't Like Mondays

There's an interesting setup on the SPX 15min coming into this week, with the possible H&S patterns that I was proposing last Tuesday morning still forming on all of SPX, NDX and RUT, but with a possible alternate falling wedge forming on SPX. Either way the obvious next move would be a test of the H&S neckline / possible falling wedge support in the 2166/7 area. At that point we should either see a fill of the open breakaway gap into 2164.25,  or a reversal back up to retest 2193 to make a likely second high of a double top.

All charts from the charts I did at the weekend for the Trader's Chart Service at theartofchart.net. further notes on the charts as usual.

SPX 15min chart:

SPX 60min chart:

So far this morning the daily middle band at 2175/6 is being tested as support and is holding so far. SPX daily chart:

Apologies for the lack of a post on Friday. Stan's on holiday and I was having a wordpress technical issue that lost me a lot of work on theartofchart.net that I then had to redo.  I called a possible island top on SPX on twitter on Friday morning and I'd note that that breakaway gap down didn't fill. This swing high may well have already been made and, on a fill of the open gap into 2164.25, likely has been made.

Monday's have been very hard to trade recently, and while the short term setup looks clear, recent history suggests that the tape may be unfriendly. Trade safe.

Topping Options

SPX went a bit lower than I was expecting yesterday morning but held breakaway gap support and we have then seen the rally to retest the 50 hour MA from below that I was looking for. That's holding so far and, if that remains the case, then on a fill of that breakaway gap support art 2164.25 then I would have an H&S target in the 2142 area, not far below the possible larger H&S neckline in the 2147/8 area. If the candidate island top gap above at 2190.15 fills then I'd expect a marginal new high that should respect trendline resistance slightly under 2200.

I'm using charts that I did yesterday night for subscribers at theartofchart.net. SPX 15min chart:

SPX 60min chart:

A strong daily RSI5/NYMO sell signal has fixed on SPX, and a daily RSI5 sell signal has also fixed on NDX. Whether SPX fails here or makes a marginal new high we should be starting at least a retest of 2100 support in the very near future. I have sketched out the ideal path I'd like to see SPX take over the next three months on the chart below. We'll see how that goes. SPX daily chart:

A return to form with a boring narrow range day so far on ES. That may continue, and if SPX fails to fill that island top gap today then that would support the H&S scenario.

Mind The Gaps

SPX hit the 2172 target I gave yesterday morning and has traded as low as 2168.5 at the time of writing. This area may hold, and if so the obvious rally target would be the left shoulder high at 2187/8, with important resistance at the 50 hour MA currently at 2182/3. If SPX was to fill the open gap at 2190.15 we would likely see a marginal new high, probably at or under 2200. If SPX fills the open gap just below at 2164.25, then that opens up the next decent support level and possible H&S neckline at 2147/8. SPX 15min chart:

A daily RSI5/NYMO sell signal fixed on SPX at the close yesterday and a daily RSI5 sell signal also fixed on NDX. The high on SPX is likely already made or very close. The obvious levels to watch for a possible high retest are the 2172 area being tested now, or the 2147/8 area if this area fails as support now. SPX daily chart:

In the short term the 60min sell signals have made target and if SPX can stay over 2164.25 I like the rally option here. If it breaks I'd be expecting to see a rally in the 2147/8 area, most likely to make an H&S right shoulder with an ideal right shoulder high in the 2177/8 area.

Possible Swing High at 2194

SPX went and tested possible smaller rising wedge resistance in the 2194 area yesterday and with the break below that rising wedge support this morning, That is now a candidate swing high. SPX 15min chart:

If that high is broken I'm not expecting it to be broken by much. There's strong resistance in the 2197/8 area and that should hold really. If the 2194 high holds then I have drawn in my preferred option for the way SPX plays out the next couple of months. This isn't the only option of course, but it could well play out this way. We'll see how this develops from here. SPX daily chart:

The tape has been incredibly boring intraday lately but that's likely to change soon. The trendline break this morning is suggesting that change may now be starting. 

In the High Window

The cycle high window on SPX opened yesterday and the centre of that window is Monday 22nd August. Stan and I are expecting the swing high in the first half of the window. SPX has made a new all time high at 2191 this morning and may need to go higher. We're thinking max 2215 area, but there's no actual need to go any higher than 2191. We'll see.

SPX daily chart:

SPX 60min chart:

SPX 15min chart:

I'd note that a 4% retracement from this morning's high would be a retest of the 2100 area. I'd be looking lower but that might be all that we see.

People from Porlock

I don't know whether many of you are familiar with Coleridge's poem 'Kubla Khan', but he told a lovely story about why this (wonderful) poem is clearly only a fragment of what should have been a larger work. His story was that he woke up from a (polite cough) vivid dream with the poem complete in his mind, and wrote down what remains as soon as he woke up. While he was still writing there was a knock on the door and he was distracted by a man from Porlock who kept him occupied for an hour sorting out something minor, and when he at last returned to his room he found that he had forgotten most of the remainder of the poem. The story may or may not be true but it's a great story, and we have all met our own men from Porlock on a regular basis I'm sure.

It's been that kind of day for me and I've been tied up by various things & I apologise for this very late post, though the charts are still relevant, and it was a reasonable inference from my post yesterday that today was likely to be dull on SPX/ES, and so it has worked out. I'm posting the ES, NQ & TF I posted for theartofchart.net members today as I haven't have a chance to redo the SPX charts, and they give a good insight into how close a top looks on all three indexes here, though I'm expecting at least TF/RUT to make a higher high next week, with a new ATH less likely but still probable on ES/SPX, and possible but least likely on NQ/NDX. ES Sep 60min chart:

NQ Sep 60min chart:

TF Sep 60min chart:

Last Sunday Stan was talking on our public Chart Chat about the high window on SPX open on Sunday 14th August with the middle of that high window on Monday 22nd August. If you haven't seen that yet the recording is posted on this page here. That's why I was doubtful about the retracement getting that far on Wednesday morning & that played out as I expected of course. We did a free educational webinar on these cycle windows yesterday and if you'd like to see that the recording is on the same page. If you are trading precious metals you should really have a look at that  recording as I was illustrating the usefulness of these windows with a look at the gold charts. I think you might find that section well worth watching.

Everyone have a great weekend. :-)

So Far, So Good

Yesterday morning I was looking for a test of the SPX 50 hour MA in the 2171/2 area and it was tested exactly at 2172 dead. SPX rallied there and ES has made further gains overnight. A lot of 5 & 15min buy signals fixed on various charts and it may well be that low holds and that the move up into a new all time high has started.

I do have a concern though, which is that the double top target wasn't hit. It may be that won't be hit, but until we see a conviction break over falling wedge resistance, which closed yesterday at 2178, then that is a possibility.   SPX 15min chart:

Yesterday's low was three handles above the daily middle band retest and that may well be close enough. there is very strong support in the 2166-72 range and as long as that support holds we should see a new ATH. On a sustained break below with a daily close back under the daily middle band the high could already be in, and I'd be looking for a 4%+ retracement. SPX daily chart:

If we do see the new high Stan & I are looking for, then that would likely be a grind up into a high in the 2190-2210 range sometime next week. If support holds today then we'll see how that goes.

Ho Hum

This is some very slow tape. We haven't seen tape this slow since last August, at the last very hard compression of the daily bollinger bands. One of my trading buds asked then whether we would every see volatility return to SPX and it was back soon after. It should be back soon here too but it may be a few days longer.

Since the start of the week Stan and I have been waiting for a test of the ES weekly pivot at 2165/6 and that's a decent match today with the SPX 50 hour MA, currently at 2171/2. A 60min sell signal has now fixed and we should now see that test as a minimum target. If that level breaks and converts to resistance then we could see a larger retracement.  SPX 60min chart:

SPX, ES, NDX & RUT have all broken the short term support trendlines I was looking at yesterday morning. If we see that test it should really be today or at most tomorrow. ES Sep 60min chart:

We should see that test and that is a significant inflection point. A sustained break opens lower targets. If it holds we are likely to see another marginal new high. The high we're expecting will likely be made next week or very shortly after.

What we are looking for here was discussed in some detail in Sunday's monthly public Chart Chat. If you haven't seen that yet then the recording for that is posted here.

Grinding Higher

I was looking for a test of short term rising support on SPX yesterday, and that target wasn't hit, but it was hit on both the NDX and RUT charts. I'm therefore watching the NDX and RUT charts for the short term support trendlines and have added those charts below the SPX 15min chart.

SPX and NDX have made marginal new swing highs this morning. A new ATH made on SPX and inching a little closer to the 200 high retest on NDX. Short term divergence is suggesting retracement here, and if those support trendlines on NDX and RUT break then we may well see a larger retracement. The tape remains very muted however and as Stan was saying in Chart Chat on Sunday, the centre of the next high window is on 22nd August, so we may well see a slow grinding top form before the likely 4%+ retracement begins. You can see the recording of Sunday's Chart Chat on this page here. SPX 15min chart:

NDX 15min chart:

RUT 15min chart:

This is still very slow tape and though an expansion is coming soon, there's no sign that it is starting now. Until that expansion starts it's important to be patient. These processes usually take longer than expected.