Are We Having Fun Yet?

I posted my premarket video on my twitter before the open today as I was going out and wasn't certain I'd be back before the close and if you missed that you can see that here. What I was talking about on ES here was a high quality falling megaphone that had formed on ES on which pattern resistance had been tested twice overnight. If that continued to hold then the likely retracement targets were either a 50% retracement back to the 2430 area or a move back to megaphone support, hit at lunchtime today at 2408.5 and very possibly bullishly underthrown at the current intraday low at 2402.25. This brings us to another important inflection point.

I was saying yesterday morning that if an H&S was forming on SPX then the ideal right shoulder high would be in the 2446 area. Yesterday's high was a close match at 2443, and the move today has retraced back to the neckline and broken down slightly through it with an H&S target in the 2385 area if this break down is sustained. If it isn't sustained, and the bull flag megaphone plays out, then this is another Janus flag, and with the bull flag falling megaphone underthrowing bullishly on ES, if we see a strong rejection back up here then there would be a high probability target back at a retest of the all time high, which would fix on a break over flag megaphone resistance on ES, currently at 2444/5. SPX daily chart:

I was also talking about a possible H&S forming on NDX yesterday morning and that too has completed and broken down with a target in the 5380 area. In theory the same double top / Janus bull flag calculation applies on NDX, but that's complicated by the also perfectly valid alternate triangle setup that has also completed and broken down there. We're going to need to see what NDX does next to discern which pattern we are looking at but on both triangle and Janus flag cases we would likely see a strong rally back over the neckline/triangle support in either event. NDX daily chart:

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

ES made it back to megaphone support and has underthrown that at the low in a very possible bullish underthrow. The underthrow means that at the next test of falling megaphone resistance, currently at 2444/5, that trendline would likely break, fixing a minimum bull flag target at a retest of the all time high. ES Sep 60min chart:

I gave key resistance on NQ yesterday at the weekly pivot at 5768 and that was broken slightly but never converted to support before today's slide began. As I've been saying, NQ is driving this bus. NQ didn't quite reach my channel support trendline but the current low has established a possible falling wedge resistance trendline. If that holds the next target within the wedge will be falling wedge resistance, currently in the 5753 area and falling rapidly. NQ Sep 60min chart:

TF has retraced to retest Tuesday's lows. There's a good case for seeing an all time high retest as long as we don't see a hard break down there. TF Sep 60min chart:

SPX tested the 3sd (three standard deviation) lower band at the low today and that is generally good for at least a decent rally,  which we have been seeing. Tomorrow is a cycle trend day and there is a decent bull case here arguing that we might see a very strong rally tomorrow, possibly adding a fourth crazy reversal candle to the three huge back to back candles put in Tuesday through today. I like the bull scenario from here though it's it's best to stay flexible and not get married to either longs or shorts. Whatever happens we have just finished a long period of compression and have started what is likely to be a significant period of expansion. That's likely to last through July into August on our projections so don't expect a fast return to business as usual.

Stan and I are doing our monthly free public Chart Chat at theartofchart.net on Sunday and it looks like we'll have a lot to talk about. If you would like to attend you can register for that on our July Free Webinars page. Seats are limited to 500 and we already have more registrations than that (some of whom won't attend) so if you would like to attend I'd suggest doing that sooner rather than later. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 170% in the seven months to June 23rd, obviously 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 The Breaks

That was a very nice day on NQ yesterday. I was looking for resistance at the weekly pivot at 5768, and the RTH high was 5764. The target on a fail was 5641 and that was slightly exceeded in globex (buffs fingernails modestly) before the start of the rally that we are seeing today. Does this mean that the seventh seal has been broken and the Bearpocalypse has begun? Um ... no, but this swing high may well finally be in, subject to what we see on these rallies/backtests.

On SPX the obvious resistance is the daily middle band (daily closing basis). That's being tested at the moment.  SPX daily chart:

On NDX the daily middle band should be a backstop rather than a strong target here. That's at 5775 with breakaway gap resistance there into Monday's close at 5779.59. If the swing high is in on NDX then that gap should not be filled. A gap fill opens up a possible all time high retest, in what would likely be the second high of a double top if seen.

It was easy to miss if you were watching the big gap up on SPX today, but NDX only delivered a small gap up today that was quickly filled into lower lows under yesterday's lows. The current low on NDX is an exact touch of an important trendline that is support on one of two likely patterns here. Option 1 is that NDX has completed forming an upsloping H&S there and on a sustained break below the neckline would look for the 5400 area. Option 2 is that the trendline is support on a classical symmetrical triangle which would likely be starting Wave E here. If the triangle is going to break down then there would be no need to retest triangle resistance, currently in the 5820 area. I'm leaning towards the H&S option. NDX daily chart:

The ES and NQ futures charts below were done after the RTH 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 ES key resistance on this backtest is the weekly pivot at 2437.25. Bulls failed to convert that to support yesterday and need to fail again today for the downtrend to resume. The 60min buy signal that fixed overnight has reached target. ES Sep 60min chart:

On NQ Stan gave the ideal backtest target in his video last night (for daily video subscribers at theartofchart.net) at monthly pivot at 5733. The HOD on NQ so far on NQ is at 5728/9 so that's being tested now. The 60min buy signal that fixed overnight has not yet reached the possible near miss target. NQ Sep 60min chart:

On TF the double top broke down and made it halfway to target before reversing hard with ES and TF broke back over key resistance at the weekly pivot at 1409.7. I was warning in my premarket video this morning (for daily video subscribers at theartofchart.net) that if weekly pivot was converted to support then TF would likely retrace back to the last high 1420/1 (another Janus flag), and TF has done that. Possible all time high retest coming on TF. TF Sep 60min chart:

I'm leaning towards a bearish resolution at these backtests, and we'll see how that goes. The rallies on ES & TF have been strong, but it feels like a bear market rally, and TF leading, closely followed by ES with NQ trailing at the back isn't a bullish looking sequence. I am concerned about the holiday weekend approaching though , we'll see.

Stan and I are doing our monthly free public Chart Chat at theartofchart.net on Sunday and it looks like we'll have a lot to talk about. If you would like to attend you can register for that on our July Free Webinars page. Seats are limited to 500 and we already have 450 registrations for that so if you would like to attend I'd suggest doing that sooner rather than later. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 170% in the seven months to June 23rd, obviously 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.

Nasdaq Support Breaks

I'm leading with the NDX and NQ charts this morning as they are driving the equities bus here. I posted my morning video for Daily Video Subscribers at theartofchart.net on twitter before the open and if you missed that you can see that here.

NDX broke back over the daily middle band on Friday and that break needed to be confirmed with another close over that on the next trading day, and NDX failed to deliver that yesterday, which was a bearish development. NDX daily chart:

SPX almost retested the all time high yesterday and came close enough for that to be the second high of a decent quality double top setup. RSI still pointing firmly down of course and if we break double top support at 2430.74 then the second high being lower increases the odds that this might be another bull flag forming. Mainly direction is about NDX/NQ here though. SPX daily chart:

The ES and NQ futures charts below were done after the RTH 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. I have updated the charts with prices up to when I started writing this post.

NQ broke both rising wedge support and the weekly pivot overnight, which was a serious sign of weakness and may mean that the main decline that we are looking for to 5641 and lower has already started. If weekly pivot at 5768 converts to resistance this morning then NQ is likely on the way to 5641 in the near future. NQ Sep 60min chart:

There is still a possible triangle setup on ES here where this decline from yesterday's highs is a backtest into the triangle before a thrust up into the all time high retest that we didn't quite see yesterday. A break below 2427/8 kills that triangle option and opens the downside. ES Sep 60min chart:

TF has slightly broken rising megaphone support and needs to break weekly pivot and double top support to open the likely retracement back to 1393. The numbers are on the chart. TF Sep 60min chart:

The main decline that we have been looking for may well now have started, but bears still have some work to do on the downside to preclude possible upside as part of topping patterns on SPX/ES & NDX/NQ. 70% odds here that we head directly lower from here IMO, and the most important numbers that I am watching this morning are the NQ weekly pivot at 5768 and ES support at 2427/8.

Stan and I are doing our monthly free public Chart Chat at theartofchart.net on Sunday and it looks like we'll have a lot to talk about. If you would like to attend you can register for that on our July 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 170% in the seven months to June 23rd, obviously 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.

Finally In The Inflection Point

Well here we are at last. NQ broke over last night's bull flag and NDX is trying to break over daily middle band resistance. NQ has reached the minimum bull flag target at 5815 and is in the inflection point that I've been looking for. On a break up from the inflection point we likely see all time high retests on NDX/NQ and SPX/ES. On the bear scenario here we see likely hard fails back into last week's lows, and likely continuation down from there. Price must decide which.

SPX has repeatedly held the daily middle band as support and may be starting a move up to a full retest of the all time high. SPX daily chart:

NDX is breaking over the daily middle band intraday. If the inflection point is going to resolve down NDX likely closes back under the daily middle band, though we could see a weak close above with a rejection instead of confirmation candle on Monday. NDX daily chart:

The ES and NQ futures charts below were done after the RTH 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. I have updated the charts with prices up to when I started writing this post.

On ES there is a possible double bottom in place. On a sustained break over 2440.25 the target would be a minimum retest of the all time high. On a fail here we likely see a sustained break below 2430 area support. ES Sep 60min chart:

NQ broke up from the bull flag and made the target at 5815. This is either a double bottom breaking up towards a minimum target at a retest of the all time high, or it is a smaller double top within what I would call a Janus bear flag with a minimum target back at 5641. There is no real middle ground on this setup so it should be one or the other. NQ Sep 60min chart:

At the time of writing bears are trying to break this down and they may succeed, but I've been treating this as a coin toss on the direction of the break and am keeping an open mind. Price will decide.

Stan and I did a free educational webinar at theartofchart.net yesterday an hour after the close, and that was the third webinar in our Managing Risk series, subtitled 'Position Sizing, Trade and Money Money Management'. If you missed it and would liked to see the recording that is on our June Free Webinars page. Warning - there is math in this webinar :-) I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% in the seven months to May 19th, obviously 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.

Intermission Day

Stan was suggesting in his post market video last night that today might be pretty quiet, and so it was. Lovely two way day for intraday trades and I had a very enjoyable trading day myself calling the move up and then the fail in the final hours, but nothing much happened from a swing trader perspective apart from compression for the next move, in a direction still to be determined.

Nothing of any significance happened on the SPX daily chart. SPX daily chart:

There was a small gap over the daily middle band on NDX that had me interested as a potential breakaway gap until it filled within minutes of the RTH open. NDX spent some of the day over the middle band but closed significantly below it. Not much change there overall. NDX daily chart:

The ES and NQ futures charts below were done after the RTH 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.

ES held the weekly pivot as support for another day. I'd note that the 60min buy signal there is still open, and the possible double bottom setup there looking for a retest of the all time high still very much in play. ES Sep 60min chart:

NQ spent the day forming a likely bull flag falling megaphone. On a break up the flag would look for a retest of last night's globex high at 5815 and that would set up another try to break up to the all time high retest, and also a double top setup if that attempted is rejected. NQ Sep 60min chart:

TF respected short term support and resistance. No clues there really. TF Sep 60min chart:

Overall this setup has me looking for another try at breaking up on SPX/ES and NDX/NQ, possibly overnight but likely tomorrow morning. At that point we see the break out of the inflection point in a direction to be determined then. That's still a coin toss IMO, though with a slight bearish lean. Personally I think the all time high retests option would be neater from a TA perspective but, last I checked, the market still doesn't do requests. Tomorrow is the other cycle trend day this week so I'm expecting direction from this inflection point to be decided tomorrow. A cycle trend day doesn't mean a full trend day, though most of these do happen on cycle trend days. They mean that there is a 70% chance of a directional day that is dominated either by buyers or sellers, often after an opening move in the other direction of course.

The gap through support or resistance option that I was looking at last night is a bit less likely now but still very much an option. If we do see those all time high retests we'll be looking for short entries there.

Stan and I did a free educational webinar at theartofchart.net today an hour after the close, and that was the third webinar in our Managing Risk series, subtitled 'Position Sizing, Trade and Money Money Management'. If you missed it and would liked to see the recording that is on our June Free Webinars page. Warning - there is math in this webinar :-) I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% in the seven months to May 19th, obviously 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.

Mind The Gap

I always enjoy using literary, philosophical or other references in the titles of my posts when I'm not summarising the central theme of the post in it, and this post narrowly escaped being entitled 'The Curious Incident of the SPX in the Daytime', before I decided that the central message of this post was too important not to be used as the title. The title would have been a reference to a quote from the famous Sherlock Holmes short story 'The Silver Blaze'.

The point is of course that while NDX/NQ did almost exactly as I predicted in my post last night, reversing in the right area back to the retest of the daily middle band on NDX, closing a handle below it, SPX/ES and RUT/TF were left at the starting gate, both closing not far above the lows for the day. What does this mean? Well at the least it means that the possible extension higher that I was looking at on SPX/ES if NDX/NQ now breaks up towards the all time high retest is now unlikely, and if NDX/NQ breaks up here then I wouldn't be looking for more than an all time high retest on SPX/ES, and likely not even that on RUT/TF.

The inflection point that I was looking at in my post last night though was very much on NDX, which closed the day at the point of decision, and with SPX having tested the daily middle band as support again today and held it again, this means that the direction from this inflection point may well be decided overnight. If so, a resolution upwards would then likely be confirmed with a breakaway gap up over daily middle band resistance on NDX, and a resolution downwards might well be signalled with a breakaway gap down through daily middle band support on SPX. If so those gaps would likely not be filled and the move in the selected direction would likely be a strong one. Hence the title.

SPX held the daily middle band at the low today and the daily RSI 5 sell signal reconfirmed after the higher high. If SPX can break that daily middle band support then this is a strong bear setup, though the sell signal would probably survive the alternate retest of the all time high on SPX. SPX daily chart:

NDX closed a handle under the daily middle band, having broken slightly over possible double bottom resistance. If this is what I would call a Janus bear flag, very like the one I was looking at on TF last night, then NDX would fail hard from this area into a minimum target at a retest of the low of the pattern at 5633.34. If this is a double bottom breaking up then the daily middle band gets broken and converted with a minimum target at the full retest of the all time high. There is no real middle ground on this setup so it's very likely one or the other. NDX daily chart:

The ES and NQ futures charts below were done after the RTH 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 ES there is a decent quality falling channel established from the high and, if that can be broken, then there is a decent double bottom setup that would look for a retest of the all time high on a sustained break over 2440.25. ES Sep 60min chart:

NQ has broken slightly over double bottom resistance and is in the inflection point here. A strong break in either direction from here likely keep going to either the top or the bottom of this range. NQ Sep 60min chart:

TF looked a bit lost today, and has converted the weekly pivot to resistance with the rejection from there at the high. A break below possible bull flag channel support currently at 1393 opens the downside. TF Sep 60min chart:

Which option do I favor here? I'm thinking this is pretty much a coin toss, with possible a slight edge towards the bear case. We'll see what happens overnight. .

Stan and I are doing our free educational webinar at theartofchart.net tomorrow afternoon an hour after the close, and that is the third webinar in our Managing Risk series, subtitled 'Position Sizing, Trade and Money Money Management', 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% in the seven months to May 19th, obviously 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.

One More Heave .... Um .... Again

I've had a gum infection this week and that has been affecting my sleep patterns and my powers of concentration. Hopefully it will mostly have passed by tomorrow, as it has definitely improved from yesterday to today.

I'm getting a post out before I go to bed tonight though because there is likely to be an important inflection point coming this week, possibly as soon as tomorrow, and everyone should be aware of that.

The short term picture on SPX / ES is that a triangle formed last week and broke up yesterday. I look at that more closely on the ES chart below but the way these generally work is that you see the initial break up (yesterday), then a backtest back into the triangle (today - possibly completed), and then a thrust up to a higher high, at which point we hit the inflection point that I'm looking at this week. When the triangle thrust ends the thrust is usually entirely retraced.

The distance covered by the triangle thrust isn't something where any meaningful target can be calculated. These vary from marginal higher highs to significant new impulses up, so resistance levels and the pattern of the thrust up will be important.

SPX tested and held the daily middle band as support on Thursday and Friday last week and that always risks a return to the daily upper band, which was retested at the new all time high on Monday. There is a decent case that the triangle thrust just retests that high and likely makes a marginal new high, and I'll explain why that is on the NDX daily chart. SPX daily chart:

The inflection point is very clear on this NDX chart. A possible double bottom setup has formed, and NDX has broken slightly over double bottom resistance before retracing today from the test of the daily middle band as resistance. As long as the daily middle band holds as resistance then this is a bear flag forming with a minimum target at a retest of last week's lows. On a break above the daily middle band, and conversion to support, this is a double bottom with a minimum target at a retest of the all time high. That is the key inflection point this week, as SPX is leading both NDX and RUT by such a distance this week so far that a retest of the ATH on NDX would likely propel SPX up by twenty or more handles, putting a push to 2470-80 into range. NDX daily chart:

The ES and NQ futures charts below were done after the RTH 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.

You can see the triangle clearly here on ES, and the retracement today tested the top of the target range. That may be enough, but ideally today's decline follows through tomorrow to the ideal retracement target at the weekly pivot at 2431.25. If so the odds are decent that that a 60min buy signal would be brewing at that test. ES Sep 60min chart:

NQ reached the test of the monthly pivot at the low today. The ideal retracement target again on NQ would be the weekly pivot at 5707.25, and that is made more attractive as a target by rising megaphone support likely crossing the weekly pivot tomorrow morning. Again, if that target is reached a 60min buy signal might well be brewing there. NQ Sep 60min chart:

TF was interesting today for a couple of reasons. The first reason is that there was also a compelling case that a double bottom was forming with a target at a retest of the all time high on TF. That double bottom broke up slightly through resistance and then retraced most of the way back to last week's low today. This is therefore what I would call a Janus bear flag, with a minimum target at a full retest of last week's lows. If we are to see that tomorrow then that supports a bit lower on ES and NQ.

The second reason that TF was interesting today is that there is no longer a strong bull setup on TF for an all time high retest. That weakens the case for an all time high retest on NQ, though TF is still currently in a possible bull flag channel with the same target of course. TF Sep 60min chart:

Is there a possibility that the indices break down directly from here? Unlikely but I'd still put the odds of that at 20%. If that is going to happen then those weekly pivots will be broken and converted to resistance, and that will signal the early failure. That's very much the alternate scenario here though. This retracement likely ended at the lows today or ends a bit lower tomorrow, and after that we should see a new all time high on SPX and maybe higher from there, if NDX adds fuel to the move by breaking over the daily middle band. We'll see what happens at that point.

Stan and I are doing our free educational webinar at theartofchart.net on Thursday afternoon an hour after the close, and that is the third webinar in our Managing Risk series, subtitled 'Position Sizing, Trade and Money Money Management', 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% in the seven months to May 19th, obviously 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.

The Big Dippers

Yesterday's setup favored the bears on the backtest of a cluster of resistance and fibonacci levels on NDX, today's lows on SPX and NDX have so far been marginal higher lows against the current retracement lows and that has me wondering about possible triangles forming here.

There is now a very decent looking double top setup on SPX that on a sustained break below 2415.70 would look for 2384/5. That is in a strong support range which I have detailed in the notes on the chart. SPX daily chart:

On NDX the main support level that I'm watching below is the possible H&S neckline area around 5568. As with SPX, if these support levels are reached then decent odds that we see significant rallies there. NDX daily chart:

The ES and NQ futures charts below done were before the RTH 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 double top setup very similar on ES. I've mentioned the increased risk due to yesterday's marginal lower high against the ATH that a bull flag may be forming here rather than a double top. The weekly pivot at 2428 is an important level for direction today and, if broken, I have a short term double bottom target from the lows this morning at 2433.75. ES Sep 60min chart:

I mentioned on NQ that the bear flag wedge turned channel that broke down overnight has a strong minimum target at the full retest of Monday's low at 5642. That minimum target is highly likely to be tested and hasn't been tested yet. Likely unfinished business below. NQ Sep 60min chart:

Watching important resistance at the weekly pivot at 1412.90. TF Sep 60min chart:

I think this reversal has legs, but the buy the dippers have had everything their own way for so long now that the decline is likely to start off being very spiky, with buy the dippers jumping on every possible long opportunity until they become discouraged. It should be fun to daytrade though, and this move should set up a larger next move coming soon that should be less spiky.

Stan and I are doing our monthly free webinar on these Big Five tech stocks at theartofchart.net today an hour after the close, 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% in the seven months to May 19th, obviously 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.

Fifty Back

I was saying on my twitter at lunchtime that the 70% option was a fail at weekly pivot resistance and the 50% retracement level on the NQ chart and that duly delivered after a slightly nonplussed pause after the FOMC rate rise at 2pm as the market tried to work out whether such a heavily trailed announcement qualified as news and, if it did, whether such expected news could really be a credible reason for markets to react to it. Honestly I have no idea what the answers to those questions might be myself, but the setup favored the bears regardless and duly delivered the reversal at obvious resistance.

Key trendline support on the NDX charts is megaphone support currently in the 5650 area, and the near miss at the last test is suggesting strongly that will break on the next test. NDX 60min chart:

The ES and NQ futures charts below were after the RTH 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 rally rising wedge broke down and as this is a likely bear flag on the bigger picture this should deliver a minimum target back at the retest of Monday's low, though if reached we will be looking for a likely move to the next big support level and possible H&S neckline in the 5550 area. NQ Sep 60min chart:

Are there any obvious weeds in this bearish rose garden? Yes, as the ES weekly pivot was tested at the intraday low and in globex since then, and this important support level on ES is holding so far. Until that breaks any declines are necessarily going to be modest. ES Sep 60min chart:

TF broke down from the rising wedge today which boosts the bear case here. TF Sep 60min chart:

In effect equities are currently stuck in a range between the weekly pivot on NQ on the upside and the weekly pivot on ES on the downside (weekly and monthly pivot levels always clearly marked on my futures charts). One of those needs to be broken and converted to resistance or support to open lower (70% odds) or higher (30% odds) targets. Not expecting to wait too long to see that break and that should be a downward break on this setup, unless bulls can rally through it. We aren't assuming that they can't do that, but until we see that we are favoring the downside.

Stan and I are doing our monthly free webinar on these Big Five tech stocks at theartofchart.net on Thursday afternoon an hour after the close, 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% in the seven months to May 19th, obviously 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.

All Fall Down

The decline on NDX on Friday was over 4% high to low intraday, and that was the mot powerful one day decline that I've seen on an equity index in some years. I was talking on Thursday last week about the resistance trendlines on NDX and AMZN still being in doubt, and both were nicely clarified at Friday's high. I also mentioned in that post that before the swing high that we are expecting here Stan and I would ideally like to see new all time highs made on all of SPX/ES, NDX/NQ and RUT/TF, and we saw all of those made before the reversal on Friday. This is a high quality candidate swing high here, but I'm just going to talk about NDX/NQ today as that has been driving the equity bull bus this year, and is the most important place to see high quality highs being made.

On NDX the broken rising channel expanded into a solid rising megaphone and the NDX low on Monday morning was a near miss of rising megaphone support. This generally signals that the trendline will get a full retest in the near future and would usually break at that test. NDX 60min chart:

On NQ there is now a decent looking IHS that on a break back over and conversion of the weekly pivot to support (5774) would look for a retest of the all time high. That's the scenario I would prefer to see here, and if it delivers then that would likely make the second high of a double top. The alternate scenario is that the rising wedge that I have marked in is a bear flag wedge, which on a break down should quickly take NDX/NQ back to retest Monday's lows. NQ Sep 60min chart:

Stan and I do a service on five of the key tech stocks at theartofchart.net (called The Big Five service), so we chart these a lot, and these are updated versions of charts I did for that last Saturday. Those five stocks are AAPL, AMZN, FB, NFLX & TSLA, and I'll have a look at one chart for each of those below, updated to show this afternoon's prices of course.

AAPL has made a very decent looking high at a strong rising megaphone resistance trendline from the 2009 lows. AAPL broke shorter term rising support and reconfirmed an RSI 5 weekly sell signal on Friday. No sign of a strong rally on AAPL so far and on a break below the weekly middle band it may form an H&S at a neckline in the 138-40 area. AAPL weekly chart:

I was looking at three possible resistance trendline options on AMZN last week and as sometimes happens the one that fixed wasn't one of them. The AMZN high on Friday established an overall rising channel from the early 2015 low and  a shorter term rising wedge from the 2016 low. I've been watching the rising wedge on the weekly RSI 5 for a break as these produce very high probability targets back at the 30 level (on RSI 5) and that broke wedge support at the close on Friday and fixed that target. We could see a high retest on AMZN, though the rally so far has been thin. AMZN weekly chart:

FB broke 2017 rising support for the second time on Friday and tested a possible asymmetric double top support trendline at the low on Monday. This level is also a possible H&S neckline of course and the obvious read here is that FB is forming a right shoulder for that H&S that would have an ideal right shoulder high in the 152.5 area. Both RSI 14 and RSI 5 weekly sell signals fixed at the close on Friday. FB weekly chart:

NFLX was already on fixed weekly RSI 14 and RSI 5 sell signals at the start of last week, but broke rising wedge support from late 2016 at the low this week. Not much of a rally so far since then and it may be that NFLX is going to head directly to the possible H&S neckline in the 138 area to form a topping pattern there. NFLX weekly chart:

TSLA had me puzzled for a while last week when it broke up from a very decent rising channel. As channels don't tend to overthrow bearishly that was a concern but by the end of the week TSLA had just expanded the channel out to a higher alternate trendline. This doesn't happen that often but is something I see regularly and is not bullish beyond that expansion. TSLA is close to retesting that new high which is good, as a full retest will establish shorter term negative RSI divergence including setting a daily RSI 5 sell signal brewing to join the RSI 14 sell signal that has already fixed there. TSLA daily chart:

I was saying in my premarket video on Monday (posted on my twitter before the open), that I liked the case for an ATH retest on NDX/NQ. I still like that case and a decent, though not great, quality IHS has now completed forming that could deliver that retest. At the same time I would note that the rally from Monday's low so far has been within a perfect rising channel on NDX so far, and that obviously may well be a bear flag channel that on a break down would have a minimum target at a retest of Monday's low. NDX has reached the 50% retracement of the decline from Friday's high to Monday's low and this is an obvious inflection point. The likely options here are either that ATH retest or that low retest and I'm not expecting to wait long for that decision to be made.

I'd prefer the ATH retest, helped by the gentle showers of dove guano scattered by the Fed tomorrow as is their habit on FOMC days, but it could go the other way, particularly if the Fed raise interest rates from almost nothing to slightly more than almost nothing as many fear they may do tomorrow. As actual interest rates are set by treasury prices and yields, and these are already up 50% on the 10 year treasury from a lot more than either Fed number from the low last year, I find the interest in these Fed moves mystifying, but if enough people take these seriously then that is enough to move markets short term.

Stan and I are doing our monthly free webinar on these Big Five tech stocks at theartofchart.net on Thursday afternoon an hour after the close, 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% in the seven months to May 19th, obviously 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.