Happy Halloween

As downtrends go this has been uninspiring, but a lower low was made on Friday and I'm wondering about a possible flag channel support hit in the 2095 area. SPX daily chart:

Short term resistance I'm taking from ES, and that is very definitely at the new weekly pivot at 2128.75 (2133/4 SPX area), which has already been tested and held twice so far this week. As long as that holds as resistance my lean is short. A break above opens up a possible higher resistance trendline test in the 2135/6 ES area (2140/1 SPX area). A break above there would look pretty bullish, and I'd then be looking at the potentially very bullish double bottom setup here on NQ. ES Dec 60min chart:

Strangely the first day of November tomorrow is the least bullish leaning day of this week historically, at about 52% bullish, but this is a bullish leaning week. Unless we see a break up this may be another dull week.

Stan and I are doing our monthly public Chart Chat at theartofchart.net on Sunday. That is free to all and seating is limited to 100, so if you want to attend you should register on this page here as soon as possible to make sure of a place. We're be running through the usual 30 to 40 instruments over all the main trading market areas.

There's something I also wanted to mention that we've been doing for a few weeks now that is free to all as well, and that is the weekly call posted on Sunday afternoons. Here is the one for this week. This is where we select a couple of futures that look like a good prospect for the week and these have been doing very well so far. Well worth a look if you trade futures and you can always find the current page under our main blog posts header here.

Long Week - TGIF

I have a fairly hectic work schedule nowadays and I've been struggling to get everything done. an obvious way to save time would be to give up writing this blog, but I'm not going to do that, as I really enjoy writing it. I'm working on rebalancing my schedule so I can reliably always get these posts out in the morning, so bear with me as I do that over the next couple of weeks as I do that, and after that the posting schedule should be pretty much back to normal.

I haven't posted the morning charts that I do for Daily Video Service subscribers at theartofchart.net here for a while so I'll do that this morning for those of you that aren't just trading equity indices. Trading on ES has been pretty tedious lately but TF is looking interesting here, and the other main futures I chart in detail - DX, CL, NG, GC & ZB have all been pretty interesting to trade the last few months. If you are trading ZB, DX or NG in particular I would suggest that you have a close look at those charts, and watch the accompanying 10 minute pre-market video, which you can see here. On days when I make these videos available (once a week or so) I post them before the open on my twitter (@shjackcharts), so if you don't want to wait, that's the best place to find them.

On equities our strong lean here is short as long as ES is respecting the weekly pivot at 2132.50 (approx 2137/8 SPX) as resistance.

ES Dec 60min chart:

NQ Dec 60min chart:

TF Dec 60min chart:

DX Dec 60min chart:

CL Dec 60min chart:

NG Dec 60min chart:

GC Dec 60min chart:

ZB Dec 60min chart:

It's been a long week and I'm very glad to see Friday. I'll be catching up with some sleep over the weekend.

Stan and I did a free educational webinar last night on trading systems and if you'd like to see the recording of that then you can see that on this page here. We do a page like this every month and all the links to register for free webinars are listed there, and the recordings are posted there afterwards. You can always find the current month's page on our blog post listing here:

I get questions regularly about trading options and I've never traded them really so there's not usually much I can say. An old trading bud of mine, Suz Smith, has recently opened a service though. She's very sharp, really knows her stuff and she's good, honest people, unlike quite a few people offering services out there. She also understands very well that the key to keeping subscribers for any pay service is to provide a good service that is excellent value for money. That seems obvious but it's remarkable how many service providers in this space seem to have missed that class in Business 101. If you're interested in Suz's service the link to her page is here, and if you want to join the you can use the code SPREAD50 for a 50% discount. I'm not getting anything in return for mentioning this, this is just a favor to Suz and those of my readers who trade options, as I know that there are a lot of services out there that don't deliver the goods. Suz Smith is the real deal.

Everyone have a great weekend. :-)

Strange Rumblings

I've been having a very intense week and it's been a struggle to get everything done. I'm hoping to get back to my normal routine tomorrow.

I was saying on Tuesday morning that the key support level to watch was rising wedge support on RUT, and very interesting things have been happening there. The rising wedge has broken down and then the double top on RUT has also broken down. The target is in the right area for a 38.2% fib retrace of the rising wedge and RUT is a very technical instrument. This may well make target and in that case the bears are still in the game here, and we should see at least some downside on SPX while this is playing out on RUT. RUT daily chart:

Nothing as interesting happening on SPX. There we have seen the daily middle band tested and that's holding as resistance so far. The door is open for more downside, but it's going to need to be quite a bit of downside to stop this looking like bull flag on the bigger picture. SPX daily chart:

Stan and I are doing a free webinar an hour after the close on 'Defining a Trading System - Optimise Your Trading to Increase Profits'. If you'd like to attend you can register for that here. I'm hoping to get tomorrow's post out earlier.

Groundhog Daze

The tape on ES/SPX has been really dull for a few months now. Usually when this kind of volatility compression happens we get a proportionate expansion in one direction or the other afterwards which restores the balance, but we haven't seen that yet and I'm considering the possibility that may not have happened so far because it's not going to happen at all. If I struggled with insomnia I'm sure I would appreciate the tape we've been seeing in the afternoons lately, but I don't, so these have been wasted on me.

In order to flip the trend back to bullish the bulls need to wake up enough buyers to deliver a definite close over the daily middle band. They failed to manage that yesterday, and at the time of writing I'm not optimistic about their chances of managing it today. If they do manage a close back above the middle band in coming days they will then need a confirming close above on the following day. SPX daily chart:

In order to open up the downside the bears need to wake up enough sellers to break rising wedge support on RUT, as if the low there last Friday holds the options for further downside are very limited. That was almost retested at the lows this morning, but not quite, so they failed to manage that today, though I was starting to wonder if they might manage it. RUT daily charts:

On the ES chart the move up from the retracement low is a pretty clear rising wedge, and at the time of writing wedge support is at 2129.50. That's going to be a decent match with the weekly pivot at 2132.50 (approx 2127.50 SPX) tomorrow morning and may need a test. ES Dec 60min chart:

Hopefully at some point in the next few days somebody will manage to do something interesting on equity indices. The cycle charts are favoring the bulls for the next move.

After The Low Window

The low window on SPX ended on Friday, and there wasn't much at the weekend to suggest that prices would go lower this week. With RUT testing main rising wedge support at the low on Friday and NDX retesting the all time highs today, there's not much to cheer the bears that has happened since. If you want to see that support hit on RUT, you can see that on Friday's post here.

On the daily chart the key resistance level is the daily middle band at 2149, and SPX has been trading around that today. Bulls need a closing break above it and a confirming close above the next day. Bears would obviously like to avoid that if possible. The tape itself seems fairly indifferent, particularly in the afternoons in recent months. SPX daily chart:

On ES the high today is a test of the monthly pivot at 2146. Again an important level and that's held so far. I was interested to see that a sell signal has fixed on the hourly RSI 14. That might deliver a test of the weekly pivot at 2132.50, though unless the tape speeds up that would seem impossibly distant for a target in trading hours today. ES Dec 60min chart:

Overall we are leaning bullish now into Thanksgiving. We might see a retest of the current retracement low before the break back up but I won't be holding my breath waiting. At this stage only a wedge support break on RUT would make the short side look interesting on anything more than an intraday basis.

One Retracement Target Hit Today

Bears started off with a great setup today with an H&S breaking down with a target at 2107.5 (approx 2113/4 SPX), and just a bit more work needed in the first hour to deliver a trend down day. They entirely failed to manage that, and ES has drifted up slowly the rest of the day. This may have been the bears' last decent chance to make lower low on this move as the low window ends on Tuesday. It was very likely the last chance to start a move that could break 2100 with any force. ES Dec 60min chart:

I was looking at the RUT chart last night thinking that we had to see at least some more downside just to test rising wedge support on the unbroken rising wedge from February there. That's no longer unfinished business below, and that test at the low this morning may mark the technical end of this retracement. RUT daily chart:

This pullbackhas been a very muted affair and bears have essentially wasted their window here. The next window is a bull window that should stretch into Thanksgiving. I'm going to be positioning for that early next week. I'd suggest not getting too married to any short positions. If that RUT wedge support holds then the next target there will be a retest of the all time high at 1296. That might be the next interesting short area. Everyone have a great weekend :-)

Three Day Rule - Day Three

Today is the third day on the three day rule and bears can trigger the rule with a close today at 2134 or below, approximately 2128 on ES. That was tested at the low today and is holding as support so far. Bears have dominated the closes recently, so we may not know for sure until the close. If the rule triggers then a lower low on this retracement before a new ATH is almost certain. If the rule doesn't trigger I'll be getting significantly more doubtful about lower lows. With ES at 2135.50 at the time of writing I'm leaning 65/35 in favor of the bear side. SPX daily 5dma chart:

On ES this is a setup that really should resolve into at least a retracement low retest. The rising wedge from last Thursday's low should deliver that, and likely still will. ES Dec 60min chart:

One thing to mention is that this low window only runs through next Tuesday 25th October. If bears can't deliver a break today then the odds against reaching that 2047 target (38.2% fib retracement of broken rising wedge) will lengthen significantly. As it is I'm already sceptical about breaking under 2100 SPX on this retracement. This has been taking too long.

Back On The Three Day Rule

Yesterday's close was a break back over the 5dma, so SPX is back on the three day rule. In the event that SPX closes more than two handles below the 5dma today or tomorrow, then the 2114 low would very likely be retested shortly afterwards.

One thing that's very interesting on this chart below is the support/resistance zone highlighted in yellow. Since the start of 2015 that has held an impressive 14 short term highs and we could be looking at the second low since it was broken.

The important resistance level at the 50 hour MA at 2137 has been broken and SPX has come close to testing the daily middle band at 2152. On a decent break over the daily middle band with a confirming close above the following day this low is likely in, but until then we are expecting another leg down. That might just deliver a marginal new low though. SPX daily 5dma chart:

On ES Stan called 2143 as important this morning, and that's held as resistance so far. I'm also watching the monthly pivot at 2146 and in the event that is converted to support, we are looking at a possible triangle resistance trendline in the 2156/7 area. We've been getting a lot of triangles lately and this may just be another. ES Dec 60min chart:

We're expecting another leg down to finish this move. That may well not get through the support range marked on the top chart. No sign at the moment that the bears can deliver anything lower than that. After a low in the next few days we are then seeing a bull window into Thanksgiving & we'll see then if bulls can do better.

Testing Resistance Too Often

I posted my daily premarket video for subscribers to the Daily Video Service at the artofchart.net on twitter this morning, because there was a serious chance of a bull breakout on the opening setup. That's fading a bit now, with SPX failing at the retest of the 50 hour MA at 2141, but it's still possible, and on a break above then main (closing) resistance is at the daily middle band in the 2153 area. You can see that premarket video here. SPX daily chart:

These charts are the ones I used in the video before the open, but the key on ES, being tested at the time of writing, is the weekly pivot at 2132.5. Bulls need to convert it to support to open higher targets. Bears have to hold it as resistance as a break above and conversion to support opens a test of the monthly pivot at 2146.5, in effect a test of the daily middle band on SPX. ES Dec 60min chart:

On NQ there is a very decent looking IHS that is trying to break up with a target back at the all time highs. I'm watching that carefully. NQ Dec 60min chart:

On TF there is a decent looking double bottom part-formed, possibly it might be a part-formed IHS, but either way the key resistance level is the weekly pivot at 1223. Conversion of that level to support opens a target in the 1243/4 area, and a very possible test of channel resistance in the 1249 area. TF is very very good technical instrument so I'll be watching it very carefully. TF Dec 60min chart:

I'm getting edgy about this downtrend because we are seeing too much bull strength. After Friday's high there should have been a retest of Thursday's low before the next serious attempt at a rally, and we didn't see that. Stan's theory is that this is some kind of bull flag forming on the bigger picture, and that ES will likely make a low this week in the 2100 area or above. He may well be right.

British Tulips On Sale

The opening setup this morning was complex so I tweeted the premarket video I recorded this morning for Daily Video Service subscribers at theartofchart.net on my main twitter this morning at the open. If you missed that you can see that here.

In summary there is a chance today for bulls to shut down the bear scenario here off yesterday's bounce at the 3sd daily lower band. Bulls would need to break back over the daily middle band, currently at 2154, and a decent match with the ES monthly pivot at 2146. Obviously they would also in that event need to avoid a reversal candle on Monday cancelling the bull breakout.

That prospect is receding a bit now, as the best shot for bulls at doing that today was the possible trend day that was developing, but that's looking unlikely now. I'm still very much leaning short, but there is a bull scenario here and we need to be aware of it. ES Dec 60min chart:

NQ Dec 60min chart:

I flagged this falling channel on TF as a worrying development for bears last night (for subscribers). That remains a threateningly bullish development until this channel breaks down .... if it does. TF Dec 60min chart:

I'm not going to be trading much today as I have to go and take some money from some insane people. There's a new £5 note introduced in the UK at the moment and some rarer serial number notes are selling for lunatic prices. This is likely a short term craze, kind of like dutch tulips but without the potential to get a nice flower as a consolation prize. You can see a story about it here.
Why is that affecting my day? Well an old friend received one of those notes this morning, and I need to sell it for him before this little speculative bubble pops. :-)

Stan and I did an education webinar yesterday on 'Trading Using Pattern Analysis' and if you missed that you can see the video on this page here. I must warn you though that if you are one of the surprisingly large number of people who believe that the standard textbooks on patterns and trendlines are the literal word of a TA deity/deities, then there is a lot of TA heresy in the webinar, so it might be worth avoiding in your case. If you are open to new ideas in TA then you should watch it.

Everyone have a great weekend.

Testing Double Top Support

The rally on SPX was muted yesterday and SPX gapped through main rising wedge support this morning. I'm expecting this to follow though, though today has so far been about retesting that broken wedge support. That's being retested now and if it holds as resistance then the next leg down should deliver a less brief break through double top support at 2119. SPX daily chart:

There are some signs that SPX might rally higher here, as declining resistance on the SPX 15min chart has broken up. If so the rally yesterday may not have been the backtest of the triangle, and that may be what we are seeing now. If so we may see yesterday's highs broken before a likely reversal back down. The overall setup here is bearish, and bears are in the driving seat here unless we see a closing break back over the daily middle band, currently at 2154. SPX 15min chart:

Stan and I are doing a free educational webinar at theartofchart.net an hour after the close tonight on 'Trading using Pattern Analysis' If you'd like to attend you can register for that here.

The Road To 2047

The bears did a lot of technical damage yesterday, and managed to both break down from the SPX triangle and briefly break below rising wedge support from the February low. I'm expecting more downside.

When a triangle like this breaks there is a sequence from that break. First there is a backtest of broken triangle support, often going back into the triangle, and we are watching that at the moment. Then the main thrust out of the triangle starts, and after that ends, the thrust is usually fully retraced. So far the backtest is forming a very decent looking shallow rising megaphone that is very likely to be a bear flag on this setup. When that breaks down the main triangle thrust down should be in progress. SPX 1min chart:

The double top on SPX isn't great quality, but it's supported by the much better quality double-tops on NDX and RUT. The double top target at 2045 is also supported by the 38.2% fib retrace target for the rising wedge from the February low, as that is usual minimum target on a break down from a rising wedge. SPX daily chart:

The very nice looking double top setup on NDX has the potential to run a lot lower. NDX daily chart:

The rising wedge on RUT hasn't broken support yet, but the double top setup is a beauty, and I'm expecting this to play out. RUT daily chart:

More notes and numbers for levels and targets are on the charts, but that's the plan for most of the rest of the month. The low window opens on the 21st October and runs through until the end of the month. After that we are confidently expecting this triangle thrust to be entirely retraced, so don't get too married to the short side. :-)

Triangle Support Broken

Well I won't say the triangle didn't have me a bit worried yesterday, with the solid low at triangle support on Friday and the near miss of triangle resistance on SPX. The break down through triangle support this morning however pretty much kills off the bull triangle scenario and this should be the start of the move down that Stan and I have been expecting. SPX 15min chart:

The next support levels to watch are main rising wedge support in the 2130-2 area, the daily lower band at 2129, and possible double top support at 2119. SPX daily chart:

ES triangle support is now also broken. ES Dec 60min chart:

Ideally I'd like to see a trend down day today to break the SPX rising wedge support at 2130. SPX and SPX looking very short term oversold though and we may not see that. It's likely to break soon though. We'll see.

Still In The Triangle

The high window ended at the close on Friday and I'm leaning short into the end of October. Does this mean that SPX cannot make a new all time high in the next few days? No. Bears need to do some damage to support to open up the downside and the Friday low at triangle support wasn't good enough. That is the key support that needs to be broken, as until that is broken, a triangle may well still be forming. The high so far today on SPX is not far away from triangle resistance. SPX 15min chart:

While triangle support held, rising channel support broke on both ES and SPX. That's cautiously bearish. SPX 60min chart:

SPX closed Friday on the daily middle band at 2153. That support needs to be broken on a daily close basis, and then not reversed the next day.  SPX daily chart:

On the ES chart again the channel broke and the triangle support held. The high today was a touch of triangle resistance at 2164. This could therefore be the last wave E of the triangle now in progress before a break up to complete the triangle sequence.  ES Dec 60min chart:

If there is a break up from the triangle I'm not expecting anything that impressive, but I am hoping that the very nice looking double top setups on NDX and RUT aren't messed up by new highs made with any confidence. We'll see what happens when volume returns to the markets tomorrow.

Closing Window

Today is the last day of the high window on SPX, and bulls have missed a couple of decent opportunities to break this up. With ES trading at 2151, the weekly pivot at 2154 was clearly never converted to support. If we are going to see a break up from this triangle then today is the last likely day to see that, and it's not looking that promising at the time of writing.

Support levels to watch today on SPX are the 50 hour MA at 2159/60, the daily middle band at 2153, and triangle support at 2144/5. If we see a break down through 2144 then the chances are that break will follow through to the downside, and our expectation is that the downtrend that may already have started will likely dominate the remainder of October. SPX 15min chart:

Same setup on ES. ES Dec 60min chart

We've been playing around with logos at the theartofchart.net, I've put a candidate example on the charts above. Our marketing guy thinks that the font isn't readable enough. Opinions welcome :-)

Today is the last trading day of our promotion at theartofchart.net to lock in the old prices before prices go up on Sunday night. I hope you've been enjoying the premarket videos I've been posting on twitter every day the last couple of weeks. These are going back to being subscriber only from today, so if you'd like to keep seeing those you can sign up for a free trial here. Today's video has already been posted on my twitter and you can also see that video here. We'll be bedding in the new subscribers for a while so I doubt if I'll be actively marketing again before December, though as theartofchart.net is what I do every day, obviously it will still be mentioned most days.

Tempus Fugit

In case you missed it, I did a post last night talking about the pattern structure and timing on SPX/ES, NQ and TF, and if you missed that you can see that here.

Another slowish day on ES/SPX. No support breaks yet and the ES weekly pivot at 2154 (2162 SPX area) may be being converted to support, but not with any real confidence yet. Both SPX and ES are in a rising channel and a triangle, but are running out of time to do the obvious next step of a break up into a retest of the all time high. The high window on SPX lasts until the close tomorrow, with a possible spill into Monday, but unless we see some upward movement soon, this is just a consolidation before the next leg down. SPX 60min chart:

ES Dec 60min chart:

How confident am I that the high window will deliver? Well there's no such thing as a sure thing but the setup for the decline we expecting is in place already, and historically these cycle windows deliver well. If we don't see a break up from the triangle today or tomorrow then my working assumption will be that the next break will be down.

We've been doing a promotion the last few weeks before a price rise at theartofchart.net, and that's gone very well. That promotion is ending on Sunday and I won't be marketing much again before Xmas I think, because we'll need some time to get the new subscribers bedded in before we are ready for the next igroup. If you'd like to lock in the current lower prices then you have until Sunday to do that. If you'd like to try the 14 day free trial then you can find that here.

Uncertain Direction

I have a bit of a windows bug with my keyboard, as if the 'Sleep' button is pressed my computer will go to sleep. That would be ok except that when the 'Wake Up' button right next to it is pressed, nothing happens at all. I have been unable to find any way to wake up my computer other than a hard reboot, and on that reboot I lose any unsaved work. For this reason mainly my office is a cat free zone.

Last night I lost about two hours of unsaved work after accidentally hitting this key and have used a lot of time today redoing it. I didn't manage to get a post out in RTH, so I'm doing a post close wrap post to look at the pattern setup on the indices here. I did do the premarket video for Daily Video Service subscribers at theartofchart.net, and hopefully some of you saw that after I posted the link on my twitter at the open. If not you can see that here and I was particularly pleased with my NG call today which delivered beautifully.

After yesterday's move I started work on my post market charts with the working assumption that the high was in, but when I had a careful look at the ES 60min chart, the low was unexpectedly strong, and raised the very real possibility that the triangle that Stan and I were assuming had broken down was still in play. The ES, NQ and TF charts I'm using below are from the post-market bonus charts that I post every night for Daily Video Service and Chart Chat Service subscribers at theartofchart.net. ES Dec 60min chart:

On the SPX chart the triangle looks like this. SPX 15min chart:

On NQ the original triangle was still in play, just with a deeper backtest. That broke up today into what should be the triangle thrust up, but didn't retest the ATH today. If it's going to retest that I'm expecting that tomorrow. NQ Dec 60min chart:

On TF the original flag was still in play.. That broke up this morning and was backtesting broken trendline resistance at the close. That should at least deliver a retest of the 1261 high, though obviously a flag will frequently not stop at the minimum retest target. TF Dec 60min chart:

So what are the prospects for the rest of the week? Well the first thing to say is that this high window ends on Friday, and possibly might extend to Monday, but if the high is going to be in the window, which it usually would be, then there are only two days, possibly three, remaining to make this high. If we are going to see this short term bullish setup play out, then it needs to be fast, and with NQ just under the all time high, then we might just see a retest and fail there, which would likely limit prospects for upside elsewhere. This rally could fail at any time, and this isn't a market to get married to any long positions, as after this high is in we should see a retrace that will be significantly larger than the one in September, and obviously the high may already be in. On the short term bull scenario we shouldn't see a break below yesterday's low at 2144 SPX of more than two handles, and ideally that won't be retested at all.

I tweeted at the open this morning that the key for this bull scenario was the conversion of the ES weekly pivot at 2154 (~2162 SPX) to support, and while ES closed RTH under that today, and remains below it, ES traded much of the day above it, and there was no obvious rejection from it. SPX also closed at 2159.73, a clear break back over the daily middle band at 2153, a marginal break over the 5dma at 2158, and twenty ticks above the 50 hour MA at 2159.53. If bulls can build on that tomorrow then we may yet see that retest of the ATH on SPX at 2193, though to get there the tape will need to speed up somewhat from the torpid action that we were seeing today. If we see a break of 2144 SPX with any force at all then the high is very likely already, in and the decline that we are expecting to dominate October should be in progress.