An Encouragingly Modest Rally

Yesterday's trend down day was a refreshing change of pace, and may well be the start of a decent decline, but the key is that a firm lid is kept on today's rally, and that there is follow through to the downside early next week.

A move like the move yesterday that breaks and closes well below the daily standard (two standard deviation) lower band often starts the strongest kind of daily lower band ride that trades between the 2sd and 3sd lower bands. To make that a likelihood here the 2sd lower band needed to be resistance today, and it has been so far. SPX daily chart:

All the daily and hourly sell signals made target yesterday except for the daily RSI 14 sell signal on NDX. Only one major support trendline was tested, and that was rising channel support from the early 2016 low on RUT. That hasn't broken yet and needs to break to open more downside. The rally from the low has been very modest on RUT so far, so any resumption of the downtrend would likely break that trendline quickly. RUT daily chart:

The ES, NQ and TF futures charts below were done an hour 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.

ES made the double bottom target at 2446.50 and that was pretty much the high today. That's encouraging for more downside on Monday. There is no open target below as the H&S target in the 2430 area was reached overnight. ES Sep 60min chart:

NQ made the double bottom target at 5823 and ran up a further twenty handles before reversing. There is a an open H&S target below in the 5705 area. NQ Sep 60min chart:

TF didn't quite reach the double bottom target at 1376, but missed by less than 0.5, so I'm counting that as close enough for government work. There is an open H&S target below at 1349. TF Sep 60min chart:

So far today this rally has been exactly what the doctor ordered to set the stage for continuation down next week. If seen the next decent target area on SPX is the 50% retrace level and possible H&S neckline in the 2405 area. A hit there would complete the first move on my July 29th possible retracement path projection sketched on my SPX daily chart at the top. Everyone have a great weekend :-)

Stan and I did our monthly free public Chart Chat at theartofchart.net on Sunday, and if you would like to see the recording that is posted on our August Free Webinars page. This week's edition of The Weekly Call is posted and the model portfolio there is up 188% in the nine months to August 5th, 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.