The Ghost Of Volatility Past

Are the equity indices topping out here or not. I think yes, though likely just for a retracement before higher highs. SPX is retesting good trendline resistance, is on a strong daily RSI 5 / NYMO sell signal, and a daily RSI 14 sell signal is now brewing as well. Another retest of the all time high would establish possible nested double tops. Maybe. SPX daily chart:

NDX broke through initial channel resistance and is testing a slightly higher and better alternate channel option. NDX daily chart:

It's hard to read the consolidation on RUT in recent days as anything other than a bull flag inviting a retest of the high, so that may be unfinished business above. RUT daily chart:

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

A decent nested double tops setup on ES if the all time high is retested and rejected. If so a hard break below weekly pivot (marked) should set the downside ball rolling. ES Dec 60min chart:

NQ is already on a 60min sell signal and a 60min RSI 14 sell signal is brewing on NDX. NQ Dec 60min chart:

Not much to say about TF other than this very much looks like a retracement / flag. If so the ATH should be retested before any reversal. TF Dec 60min chart:

If ES can break the all time high with any confidence then Stan has the next target in the 2610 area.

I'll leave you with my favorite horror parody from YouTube.  :-)

Everyone have a great Halloween. :-)

A Whiff Of Grapeshot

Nice trend down for the first half day today. There is still an outstanding H&S target below on NQ in the 5975 area, but the strong support zone on ES in the 2539-43 has been tested with the LOD currently at 2541.5. That is a possible H&S neckline, and if a right shoulder forms the ideal right shoulder high would be in the 2561/2 area.

On the bigger picture the strong daily RSI 5 / NYMO sell signal that fixed on SPX is playing out, and it looks unlikely that will reach the possible near miss target today. That would fit with the possible H&S forming on ES, with would have a target in the 2507-12 area on a conviction break down. That is a decent match with the obvious first trendline support target on SPX, currently in the 2500 area. SPX daily chart:

As with SPX, the recent highs on RUT have established a decent quality candidate resistance trendline for this move up from early 2016. If so the obvious next trendline target within this overall rising wedge would be rising support from the early 2016 lows, currently in the 1400 area. With the RUT P/E ratio currently at 115, it could certainly use some downside.

If any of you are wondering why the P/E ratio I look at for RUT is so much higher that that generally quoted, it is because that one has been adjusted to exclude all the RUT component companies that are losing money, which is certainly a way to make the numbers look better. Similar pioneering work has been done on improving inflation numbers by excluding necessities that are rising in price, but that doesn't make it so, though it does explain why the inflation numbers produced nowadays bear ever less relation to the rising cost of living. If you torture data for long enough, it will tell you anything you want to know :-)

RUT daily chart:

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

I was talking in my premarket video this morning about the strong support zone in the 2539-43 area and that has held the likely LOD at 2541.5. This zone is a possible H&S neckline and an ideal right shoulder high would be in the 2561/2 area, with the target on completion and sustained break below 2539 likely to be in the 2507-12 area. If you missed my posting that video on my twitter earlier, you can see that here and all the equity index analysis is covered in the first three minutes. ES Dec 60min chart:

NQ hasn't made the H&S target in the 5975 area yet, but that will likely be hit after this rally from the lows today tops out. NQ Dec 60min chart:

No clear short term downside target on TF, but I'll be watching the monthly pivot at 1460 for possible support if reached. TF Dec 60min chart:

Stan and I are doing an educational webinar at theartofchart.net an hour after the close tomorrow on the use of MACD and moving averages in trading, and if you'd like to attend that you can register for that on the October Free Webinars page here.

I've been fighting a heavy cold this week, happily passing now, and also a serious technical problem on my main charting computer, which I'm planning to reload after I do my premarket video tomorrow. There is unlikely to be a post tomorrow but I will try hard to get one out on Friday.

Finally Monsieur, A Wafer Thin Mint

I've been mentioning that TF/RUT has been forming some kind of bull flag that should deliver a retest of the all time highs on TF/RUT, and that bull flag is a clear falling megaphone flag on RUT that underthrew bullishly yesterday morning and broke up this morning with a minimum target at a retest of the all time high on RUT at 1514.94. The all time high on TF was made outside RTH and is slightly higher in the 1518.40 area. I'd expect both to be tested before any serious reversal. RUT 60min chart:

SPX is forming a decent quality rising wedge and the obvious read for yesterday's near miss of the wedge support trendline is that the trendline should be tested again soon, and would likely break on that test. However the slight overthrow of the wedge resistance trendline could mean that an alternate slightly higher trendline is forming. If seen that would currently be in the 2580 area. SPX 60min 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.

On ES I was expecting at least a retest of the new all time high made overnight today and we've seen that today. A possible 60min sell signal is now brewing on ES. ES Dec 60min chart:

On NQ I was expecting a retest of the all time high and we haven't seen that yet, but the action this afternoon looks like a bull flag forming, so that should happen sometime in the next trading day or so. NQ Dec 60min chart:

No all time high retest today on RUT or TF but it's a reasonable expectation that we will see both in the near future. TF Dec 60min chart:

So what happens when these last little upside targets are made? I'm expecting a retracement to start shortly afterwards. Trendline resistance on SPX is suggesting strongly that a high made before close of business on Monday would likely be under 2585. An extension in time beyond Monday has that trendline rising by about two handles per day and my working assumption would be that the swing high would by made on Wednesday at the latest.

How far will that retracement get? We'll have to see. Everyone have a great weekend. :-)

Negative Divergence Abounds

Other than on Asian markets, there is a lot of negative divergence on US and European indices on the weekly and daily charts now, with the first of those fixing on the RUT and FTSE daily RSI 5s this week.

SPX has possible daily RSI 14 and RSI 5 sell signals brewing, one half decent red daily candle would likely fix both signals. SPX daily chart:

On NDX a daily RSI 14 sell signal fixed months ago and is of no immediate interest. A shorter term RSI 5 sell signal is brewing there and NQ reached Stan's target at 6125 yesterday. NDX daily chart:

A possible weak RSI 14 sell signal is brewing on RUT, and a weak RSI 5 sell signal has already fixed. A likely bull flag has been forming over the last few days and a retest of the all time high is likely before reversal. RUT daily chart:

On DAX both RSI 14 and RSI 5 sell signals are brewing, though the overall pattern setup is suggesting unfinished business above. DAX daily chart:

On FTSE a daily RSI 5 sell signal has fixed but there is also an open bull flag target at a retest of the all time high. That target should be hit before any serious reversal. FTSE daily chart:

At least some retracement should be close here, and that could develop into something impressive. If seen, we likely see that swing high in the next few trading days.

Stan and I are doing a free public webinar on the use of MACD in day and swing trading an hour after the close on Thursday at theartofchart.net. If you would like to attend then you can register for that on our October Free Webinars page.

Stamped On These Lifeless Things

There are now both possible RSI 14 and RSI 5 sell signals brewing on the SPX daily chart. Sometime in the next few days these are likely to fix as a retracement begins that should at least take SPX back to the daily middle band, currently at 2523. SPX daily chart:

There are possible double top setups on both ES and NQ. The ES pattern is a possible match with a test of rising support. All of SPX, NDX and RUT are still on hourly RSI 14 sell signals. ES Dec 60min chart:

NQ Dec 60min chart:

There have been possible reversal patterns formed on TF over the last few days, but overall the likelihood is that TF has been correcting in time rather than price. If so this is a likely bull flag forming. TF Dec 60min chart:

This has been some stupefyingly boring tape so far in October and a decent move in any direction would be a refreshing change of pace. That move should be a retracement, starting in the next few days, which may not be a large one.

Stan and I are doing a free public webinar on our Big Five stocks an hour after the close tonight at theartofchart.net. These are AAPL, AMZN, FB, NFLX & TSLA. If you would like to attend then you can register for that on our October Free Webinars page.

Some More Retracement Coming ...... Probably

Obviously the bears have had serious issues achieving anything recently, and yet again today they have delivered their signature matching lows at the current lows of the day, but there is a decent chance that there is at least some more retracement coming in the next day or two, with all of the hourly charts on SPX, NDX and RUT currently on RSI 14 sell signals. I'm not expecting anything impressive, and the structure here is suggesting that will be at least one more leg up after that, so if seen this larger retracement should be a dip buying opportunity into new all time highs on SPX and NDX, and possibly on RUT as well. 

On SPX the obvious support levels are the 50 hour MA in the 2540 area and possible short term rising wedge support in the 2525-8 area. SPX 60min chart: 

The obvious support area on NDX is the 6000-20 area above the breakaway gap into these new all time highs. NDX 60min chart: 

There is a possible small double top here on RUT and a decent looking possible rising channel. RUT has been trading ahead of the other two indices I think so we may not see another new all time high on RUT on this move. RUT 60min 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.

I have the obvious rising resistance on ES currently in the 2566 area. I'd be redrawing that if we were to see a test of rising support, currently in the 2524 area, before a hit of that resistance trendline. ES Dec 60min chart: 

NQ has broken short term rising support since this morning and may be putting in the right shoulder on a small H&S that on a break and conversion to resistance of weekly pivot at 6032 would look for a target in the 5987 area. NQ Dec 60min chart: 

There is another possible H&S forming on the TF chart and on a break and conversion to resistance on the TF weekly pivot at 1506.7 that would have a target in the 1490 area. TF Dec 60min chart: 

Stan and I are not looking for a possible swing higher here. The structure strongly suggests another leg up before we see that. Any decent dip here, if seen at all, is likely a buying opportunity. 

On A Working Holiday This Week

I'm on a working holiday this week and am working on a friend's computer setup. I am just about scraping by with a lousy two 19" screens, which beats the hell out of a laptop but still feels very restricted compared to my usual setup. I'm doing a post today and either on Thursday or Friday, and then will be back behind my usual desk on Monday. :-)

SPX has hit and slightly broken above the wedge resistance I have been looking for. This is likely a bearish overthrow but as NQ hasn't yet reached the all time high retest expected there SPX will likely go up a few more handles while NQ does that retest. SPX 60min chart:

On the daily chart this last push up has killed the negative divergence on the RSI 5, so there is no longer a strong RSI 5 / NYMO sell signal brewing there. If we are to see another divergence develop then that would require a retracement and then another all time high retest to set that up. SPX daily chart:

I mentioned last week that RUT had broken all short term trendline resistance and I don't yet have any obvious resistance or targets there. What I will mention, though I'd be surprised to see it deliver, is a possible very bullish option that the short term rising wedge or channel on RUT has broken up with a target in the 1600 area, possibly on the way to main channel resistance, currently in the 1640 area.

Why don't I like this option? Mainly because it doesn't fit at all with SPX or NDX, but also because RUT is now again reaching the P/E ratio of 100 as an index from which it rejected so firmly last time. It's not sustainable to spend long over this extreme nosebleed average P/E, and it would be very surprising to see RUT spike up hard from it. Time will tell as always. RUT daily chart:

The ES, NQ futures charts below were done 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.

As with SPX, ES has broken slightly over obvious rising wedge resistance and is currently at the 2529 target that Stan was looking for last week. I do have a possible alternate wedge resistance trendline now in the 2536 area. ES Dec 60min chart:

This NQ chart is the main chart that I am watching at the moment, because the pattern setup there is the strongest. This is running the bull flag / falling megaphone scenario that I was talking about last week and NQ that may well reach the target at the all time high retest on NQ at 6025 within hours. No notes from today but if you look at last night's notes (2nd Oct - PM for post market), I was talking about the short term rising wedge forming on NQ. That tested wedge resistance overnight, and then wedge support again this morning, and unless the wedge breaks down then the next obvious target within the wedge would be wedge resistance, currently at 6026, just above the flag target. Short term wedge support currently in the 5985 area. NQ Dec 60min chart:

On the TF chart I was talking yesterday about the same possible setup into 1600. Not expecting that to happen but I always bear decent looking alternate scenarios in mind, particularly when the primary scenario has no obvious strong pattern. TF Dec 60min chart:

The next post will be Thursday or Friday, depending on time. Trade safe :-)