The Low Before The High?

NDX retraced today without hitting my channel resistance trendlines in the 5830 area. My working assumption is that NDX will test those levels tomorrow or Friday. NDX 60min chart

RUT is getting close to some serious support levels. RUT daily chart:

The SPX low this morning was at the 50 hour MA. A red close today followed by a new ATH tomorrow might well set a daily RSI 5 sell signal brewing. SPX daily 5dma chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

If we see a new ATH next on NQ then today's decline has set a possible double top forming here. Unsustained spikes down are frequently seen just before swing highs. NQ Jun 60min chart:

TF retraced to falling wedge resistance and then broke down from the wedge, making the H&S target at 1354 and then rallying. The falling wedge may be expanding into a larger pattern, but if that isn't the case then the falling wedge target is at a retest of the last low at 1344. TF Jun 60min chart:

ES broke up from the bull flag channel I was looking at, made a marginal lower high against the ATH, and then declined to form a larger bull flag, this time as a falling megaphone. Setup here still leans bullish, and still looking for a minimum full ATH retest on a break up. ES Jun 60min chart:

Tomorrow is the first day of the month, historically leaning strongly bullish. On this setup I would be surprised not to see new all time highs on SPX/ES and NDX/NQ this week and I'll be watching that trendline resistance on NDX/NQ on any new ATH there.

Stan and I are doing our monthly free public Chart Chat webinar at theartofchart.net on Sunday afternoon at 4pm EDT, and if you'd like to attend then you can register for that on our June Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Partying Like It's 1999

I didn't get to the post in RTH today, so I thought I'd do something different today and have a close look at NDX (Nasdaq 100). This is worth doing as there can be little doubt which index has been driving the bull bus in recent months, so I've been looking it carefully and am taking the opportunity to share what I'm seeing there tonight, with my normal mainly SPX-centric view back for tomorrow's post.

The shorter term setup here is a rising channel from the April low within a larger rising channel from the November '16 lows. The two channel resistance trendlines are intersecting this week in the 5830 area and that is the obvious target for NDX this week.

That said there is a lot of negative divergence on NDX here, with both RSI 14 and RSI 5 sell signals brewing and close to fixing on the hourly chart, and I have drawn in two possible rising wedge resistance trendlines for the channel from the Nov '16 lows. Both are high quality options and the lower option has already been tested. Whichever trendline is the correct one would be confirmed with a test here and then a subsequent test of trendline support from that low, currently in the 5575 area. NDX 60min chart:

What if NDX tests those channel resistance trendlines and breaks over the resistance there? Well there is a higher option that I'm looking at here as a possibility. On the daily chart below I have two possible rising channel resistance trendline options from the February 2016 low, with those currently in the 5855 and 5900 areas respectively. NDX daily chart:

What's interesting though is that on the monthly chart I have possible rising channel resistance from the March 2009 low also currently in the 5900 area. I'm not expecting to see 5830 resistance broken, and it may not even be tested, but if NDX breaks up, then the 5900 area makes a compelling alternate target. NDX monthly chart:

The ES and NQ futures charts below were done after the close for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

On NQ the rising megaphone resistance is a decent match with rising channel resistance on NDX, with the differences here being that on NQ the trendline has already been tested, and that the 60min sell signal that fixed on NQ over the long weekend made target at the open this morning, along with the open sell signals on both ES and TF. NQ Jun 60min chart:

On ES the pattern from the ATH last week is a shallow falling channel which is most likely a bull flag. On a break up the minimum target would be a retest of the ATH, As that is a very short journey that doesn't necessarily mean anything in terms of the other indices. ES Jun 60min chart:

On TF, as ever the most bearish of these three indices, an H&S has formed and broken down slightly. If this break down is sustained then the target is in the 1354 area. A strong rejection would look for a retest of the last high at 1393. TF Jun 60min chart:

Whatever happens next this upswing looks almost tapped out short term, and the chances of a new ATH with any confidence in the near future on SPX/ES look low, tapering down to very low on RUT/TF. If there is anything even moderately impressive remaining on the upside it will likely be on NDX/NQ, and even that looks close to a high here.

Stan and I are doing our monthly free public Chart Chat webinar at theartofchart.net on Sunday afternoon at 4pm EDT, and if you'd like to attend then you can register for that on our June Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Snapshots

Just a quick post as I've been fighting the clock all day today, with a review of the pattern setup on SPX/ES, NDX/NQ and RUT/TF with the break over resistance last night.

On SPX the short term pattern from 2352 is a decent rising wedge. Wedge support currently in the 2410 area and a 15min RSI 14 sell signal fixed in the last half hour today. At the close a possible small double top forming looking for 2405/6 area on a sustained break below 2411.83.  SPX 15min chart:

On ES there are now decent rising wedge resistance and support trendlines, with wedge support now in the 2408 area. A possible 60min sell signal is brewing. ES Jun 60min chart:

Another decent rising wedge on NDX. Wedge support currently in the 5750 area. A 15min RSI 14 sell signal fixed in the last half hour today. NDX 15min chart:

There's a very decent rising wedge formed on NQ that held the low perfectly this morning but then broke up at the test of wedge resistance to test bigger picture channel resistance, which has held perfectly so far.  If that continues to hold, then the break up from the wedge was a likely bearish overthrow, and NQ made a strong candidate for swing high at the high today, with the obvious next target within the channel at channel support, currently in the 5600 area.  NQ Jun 60min chart:

On RUT wedge resistance held well at the high today and wedge support has broken and is backtesting the break. Possible wedge turns channel support now in the 1380 area. RUT 15min chart:

TF broke over yesterday's resistance at monthly pivot last night but failed to convert that to support. A 60min sell signal fixed this morning and rising wedge support broke. Potential wedge turns channel support currently in the 1372 area. TF Jun 60min chart:

Were the swing highs made today? Very possibly yes, as this is a strong candidate for swing high on NQ, and it's pretty obvious that NDX/NQ is driving this bull bus. However my comments about holiday tape yesterday remain valid today. I was asking around today to see if anyone could remember a strong reversal down in the two trading days before a holiday and came up empty. I can't recall any instances myself. If the swing high is in then any decline this week may be modest, and if this week's other cycle trend day tomorrow delivers a strong move, it's hard to see that move heading south.

I really like this as a candidate swing high on NQ. We'll see whether my channel can survive into the weekend. Any significant break over 5800 on NQ would kill it.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close tonight on Trader Psychology in the second of our Managing Risk webinars, and if you'd like to attend then you can register for that on our May Free Webinars page. The video for last week's Big Five webinar is also posted there. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Unfinished Business

Yesterday was one of the lowest volume days of the year, and today was not an exciting day. This isn't unusual just before a holiday weekend, though it's rare to see much slowdown before Thursday. Yesterday I mentioned two levels that were unfinished business that might well need to be completed on NQ and TF. The unfinished business on TF was the test of the IHS target and monthly pivot at 1386, and that was hit this morning. The unfinished business on NQ was at the full retest of noon the all time high at 2427, and that was hit at the high this afternoon. I now have no open pattern targets above, apart from a weak possible alternate IHS target on NQ at 2746.

The obvious next move here is a reversal back down. The setup is all there and if this was a bullish setup I'd be taking out a second mortgage on the farm to add to my longs. As a bearish setup I like it a lot, but is obviously reliant on the bears showing us something to show they are still with us in more than spirit.

The important trend support levels on SPX below are at the daily middle band at 2390, the 5dma and 2389, and the 50 hour MA at 2387. Bears need to break that band of support and convert it to resistance to demonstrate that they are still in the game here. If they can manage a sustained break below then the next obvious targets would be possible double top support at 2322 and then rising wedge support in the 2280 area.

SPX daily chart:

An RSI 5 sell signal has fixed on the hourly chart. SPX 60min chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES still likely topping out. The RSI triangle broke up and made target at 70 (on RSI), A possible 60min sell signal is still brewing and first strong support at the weekly pivot at 2390.5 is a strong match with the 2387-90 key support band on SPX. ES Jun 60min chart:

NQ has made the IHS target and has no further unfinished business above. A 60min sell signal fixed yesterday and I'm looking for reversal back down. NQ Jun 60min chart:

TF made the unfinished business at the IHS target and monthly pivot test at 1386.7 and rejected there to break down through wedge support. This high should be in, barring a possible retest of today's high as part of a topping process. TF Jun 60min chart:

I'm concerned about the low volume and approaching holiday for this setup, particularly as bears have a history of performance issues and failing to get it down, so to speak, when the moment of truth arrives. We'll see how they manage here. It is a nice setup, and the reservations I had yesterday about obvious unfinished business above have been sorted out at the NQ and TF highs today

Stan and I are doing a free public webinar at theartofchart.net an hour after the close tomorrow on Trader Psychology in the second of our Managing Risk webinars, and if you'd like to attend then you can register for that on our May Free Webinars page. The video for last week's Big Five webinar is also posted there. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Back On The Three Day Rule

SPX resolved higher yesterday and the cycle trend day delivered a unidirectional day dominated by the bulls, though not making any new speed records of course. Today is the other cycle trend day this week but as yesterday's cycle trend day delivered, that less likely to deliver today, and the day has been a two way trade so far.

SPX delivered strong closing breaks above the important resistance levels yesterday and at the time of writing they are the 5dma at 2379-80, the 50 hour MA at 2387/8, and the daily middle band at 2390.

The break over the daily middle band requires confirmation with a close above it again today, and as the decline into 2352 was a shade over 2.1%, the break back over the 5dma puts SPX back on the three day rule, which is that on a break back (more than two handles) below the 5dma today or tomorrow looks for a retest of the last low at 2352 before a retest of the last high at 2405. If we were to see that high retest before the break back below the 5dma that would be strange however, and out of the dozens of these breaks over the last ten years I can't recall that happening before. If we see that break after an ATH retest on SPX that might raise a question mark over the break, though SPX would likely make that target in any case. SPX daily 5dma chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES made the low at rising wedge support this morning and rallied back to wedge resistance this afternoon. Wedge support is currently in the 2393.75 area and that is the obvious next short term target. On the bigger picture these wedges break down 70% of the time and the 60min sell signal that is brewing is suggesting strongly that this one will break down too. ES Jun 60min chart:

The higher quality rising wedge is on NQ, and rising wedge support was broken at the low this morning. The possible 60min sell signal on NQ also fixed this morning so NQ is likely in a topping process. That could involve a retest of the high but it seems more likely that NQ is forming an H&S right shoulder here that would have an ideal high in the 5706 area. If NQ rallies back to that area, another leg down may well start there. I'd note that I have an IHS target on NQ at a full retest of the all time high and that target has not yet been reached. That target may still need to be reached. NQ Jun 60min chart:

I also have an IHS target not yet reached on TF at 1385/6, though that target area is most compelling on a test today. Like ES a 60min sell signal is brewing but not yet fixed, and like NQ the rising channel broke down at the low this morning. TF Jun 60min chart:

I called a possible swing high at the 2399.50 ES high this afternoon. That's not an ideal setup but very possible. We'll see whether indices can manage higher. Possible unfinished business above at the ATh retest on NQ and 1385/6 on TF.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close on Thursday on Trader Psychology in the second of our Managing Risk webinars, and if you'd like to attend then you can register for that on our May Free Webinars page. The video for last week's Big Five webinar is also posted there. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

An old trading friend died yesterday and I want to take a moment to remember a good man and very talented analyst, William Blount at Mr Topstep. He was kind and generous enough with his time to teach myself and others a lot about trading ES in the couple of years we spent trading together. He gave just as impressive an example in his death as he did in his life, living more than his due three score and ten years, producing excellent work up until his last day, and then dying suddenly with no extended illness or pain. I hope to be fortunate enough to follow suit on all three counts in due course. Bill will be missed by his many friends and colleagues over the years and I am confident that his funeral will be a great deal better attended than mine is likely to be, unless I start to get out a lot more often. The world is a poorer place for his absence, which is something we should all aspire to as a hard earned and worthwhile epitaph. A life well and fully lived. I will be raising a glass with (unusually) something alcoholic in it to him in remembrance soon. Godspeed to you Bill.

Decision Time

The three levels that I was watching on Friday for resistance on SPX were all tested and held. The lowest of those levels are the 5dma, currently at 2379/80. That was broken intraday but SPX returned to close on it. The next level is the 50 hour MA, currently at 2385/6, and then the daily middle band, currently at 2389/90. SPX is currently over all three but needs to sustain the breaks to open the retest of the all time high.

The pattern setup leans bearish and hourly sell signals are now brewing on all of SPX, ES, NQ and TF. If bears can break back below the ES monthly pivot at 2366 then we'll be expecting lower lows with an obvious next target at possible double top support at 2322 SPX.

If bears can't get traction today and SPX holds these potential resistance breaks then the obvious next target would be the all time high retest. Today and tomorrow are cycle trend days so wherever this is headed, it may well be a fast journey. SPX daily chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

On ES a possible 60min sell signal is brewing and the AM high so far may be the second high of a small double top. The key support levels are weekly pivot at 2377 and then monthly pivot at 2366. These are the key levels that need to be broken and converted to resistance to open lower lows. ES Jun 60min chart:

On NQ a possible 60min sell signal is brewing and the AM high so far may be the second high of a small double top. The key support level is weekly pivot at 5644.25. NQ Jun 60min chart:

On TF a possible 60min sell signal is brewing and the AM high so far may be the second high of a small double top. The key support level is possible double top support at 1362.50 on a break back below the weekly pivot at 1369.70. TF Jun 60min chart:

This is a nice setup for a fail here, if bears are up to the job. We should see whether they are this morning. If the all time high is retested that may well be the second high of a double top.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close on Thursday on Trader Psychology in the second of our Managing Risk webinars, and if you'd like to attend then you can register for that on our May Free Webinars page. The video for last week's Big Five webinar is also posted there. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% over the last six months, looking well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Backtesting Broken Support

I was saying yesterday that my preferred target for this rally would be a backtest of the daily middle band on SPX. That's now at 2388.50 and the high today at the time of writing is at 2384.41, so obviously SPX is now in the backtest area. The 60min buy signals on the SPX, ES, NQ and TF charts have now all made target and this is an obvious inflection point. On a reversal back down here the next target on SPX is larger double top support at 2322. On a break above with confidence the obvious next target would be a retest of the ATH and likely marginal new ATH.

Are there reasons to think that bulls may drive SPX through resistance here? Yes there are. Firstly the action so far on SPX/ES is very trendy so far, and I have valid IHS patterns on ES, NQ & TF that are all pointing higher, though in the case of ES that's only marginally higher to the weekly pivot at 2390.50.

SPX is now starting a test of the 61.8% fib retracement at 2385.50, and the daily middle band at 2388.50. SPX daily chart:

SPX is now slightly over the 5dma and backtest of broken trendline support but not significantly so far. These four levels at 5dma, trendline backtest, 61.8% fib and daily middle band are most of the resistance zone here with the fifth and last part slightly higher at the weekly pivot on ES at 2390.5. SPX daily 5dma chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

On these futures charts I'd mention that I leave the notes on these for two or three days marked with the day and AM (premarket notes) and PM (post market notes), so you can usually look back if you want to. I'm mentioning this today because the notes from last night on the charts below are worth a look.

On ES the IHS target is at the retest of weekly pivot at 2390.5 (about 2391/2 SPX). That is the top of the inflection/resistance zone and a break above with conversion to support opens the ATH retest. ES Jun 60min chart:

 NQ is currently testing the resistance at weekly pivot there and that's been holding for over two hours so far, though not with any clear rejection so far. The IHS on NQ has a target back at the ATH retest and if NQ is going to reverse back down without that ATH retest, this is the obvious place to do that, though it could still break above it and fail to convert it to support and fail from that failed break high. NQ Jun 60min chart:

The IHS target on TF is at 1381/2 and that likely doesn't hit either unless resistance breaks on ES and NQ. TF Jun 60min chart:

I'm leaning towards resistance holding today but wouldn't be that surprised to see it break on this kind of approach today. A sustained break should deliver ATH retests on ES & NQ. If so I would note that there is nothing inherently bullish about high retests, and that some 70% of tops on SPX are some kind of double top.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close next Thursday on Trader Psychology in the second of our Managing Risk webinars, and if you'd like to attend then you can register for that on our May Free Webinars page. The video for last night's Big Five webinar is also posted there. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 167% over the last six months, looking well on course to make our target minimum 200% return over the first year. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Relief Rally

SPX made the initial double top target at 2356/7 and the rally I was expecting from the target area is in progress. The obvious fib retrace targets are the 50% at 2379 and the 61.8% at 2385.50 and the 61.8% is a strong match with the ideal backtest target on the daily chart at the daily middle band, currently at 2386/7. SPX daily chart:

On the hourly chart an RSI 5 buy signal fixed this morning and the obvious backtest targets above are broken support at 2381/2 or the 50 hour MA, currently at 2391 but falling fast. SPX 60min chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

60min buy signals have now fixed on all of ES, NQ & TF and looking at those I like the target at the backtest of the daily middle band on SPX best as the target here. We'll see. ES Jun 60min chart:

NQ Jun 60min chart:

TF Jun 60min chart:

The swing highs are likely in now but after this rally bears need to confirm with lower lows. The next big target area would be the test of the main double top support at 2322.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close today looking at our Big Five Service stocks (AAPL, AMZN, FB, NFLX, TSLA), and if you'd like to attend then you can register for that on our May Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 167% over the last six months, looking well on course to make our target minimum 200% return over the first year. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

So Here We Are

Yesterday's call for a marginal higher high and rejection worked out ok (buffs fingernails modestly) , even if yesterday afternoon was seriously dull. So now what?  Well the first double top target on SPX at 2356/7 has not yet quite been made and that should be tested either this afternoon or tomorrow before we see a likely rally from that area. After that we are looking for a move that should test main double top support at 2322. More details on target areas and support on the charts below. SPX daily chart:

SPX 60min chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

The ES low today was just three handles above the double top target at 2355. That's a strong match with the target on SPX and I'm expecting that target to be reached. ES Jun 60min chart:

NQ made the H&S target at 5635 and then some. NQ was the weakest of these three indices today. NQ Jun 60min chart:

TF made the H&S target at 1358. TF Jun 60min chart:

Stan's target zone on ES is 2350-5 and we are expecting to see a rally from there. 60min buy signals are already brewing on ES and NQ. What I would add though is that there is important gap support from 2348.69, and if that should fill on an opening gap down, then that may be a breakaway gap that wouldn't beb filled for a while. I'll be watching that carefully.

Obviously it's too soon to tell whether these highs will be the several month highs that we are looking for here, but this is a very promising start. Time will tell as always.

Stan and I are doing a free public webinar at theartofchart.net an hour after the close tomorrow looking at our Big Five Service stocks (AAPL, AMZN, FB, NFLX, TSLA), and if you'd like to attend then you can register for that on our May Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 167% over the last six months, looking well on course to make our target minimum 200% return over the first year. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

Be Here Now

The opening setup today on both SPX and NDX is close to ideal if we are going to see the swing high that Stan and I are expecting to see here. If that's going to happen, the odds are decent that it will happens at marginal new highs on SPX and NDX today.

On SPX there is now a nicely formed RSI 5 / NYMO sell signal brewing. That will need some downside to fix the signal but I'm expecting that signal to take SPX on the first leg down on this expected multi-month retracement into the summer. SPX daily chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES has made the marginal new high over the the ATH at 2403.75 that I was looking for and may run a few handles higher, but this setup now looks cooked. ES Jun 60min chart:

 There is a very encouraging perfect rising wedge on NQ here. Wedge resistance currently in the 5722-4 area and, while I'm expecting this to break down, I'd note that we could see a bearish overthrow over wedge resistance at the high. NQ Jun 60min chart:

On TF another retest of the all time high looks unlikely unless TF can sustain a break over 2404, which currently looks unlikely. TF regularly surprises though so maybe. TF Jun 60min chart:

This is a very nice topping setup at the end of our cycle high window. Ideally we see marginal new all time highs today on SPX and NDX and then the bears take over the tape until a low in August. We'll see how that goes :-)

Stan and I are doing a free public webinar at theartofchart.net an hour after the close on Thursday looking at our Big Five Service stocks (AAPL, AMZN, FB, NFLX, TSLA), and if you'd like to attend then you can register for that on our May Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 167% over the last six months, looking well on course to make our target minimum 200% return over the first year. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.