Choices Choices

 SPX did the lower low I was expecting in my last post and found support at the rising support trendline from the March 2020 low, as I had suggested it might.

The strong rally since then is now within striking distance of a retest of the all time high, and if seen, the normal range for the next high of 3% to 4.5% above the 45dma, now at 4598, would now be in the 4736 to 4805 range. That is particularly interesting as that range includes the retest of the all time high at the lower end and I have the main resistance trendline on SPX at the upper end in the 4800 area.

SPX daily vs 45dma chart:

On the SPX weekly chart the retracement low was also a backtest of the weekly middle band, now at , always a key support level and one which will need to be broken and converted to resistance in order to enable any more substantial pullback to take place.

SPX weekly chart:

On the daily chart SPX has broken back over the daily middle band and converted that to support and until that changes that is key short term support, now at 4652.

SPX daily chart:

The SPX 60min chart is the most interesting here though. In terms of support the retracement low was a slight break of the rising support trendline from the March 2020 low, leaving a possibility in the mix that a topping pattern is forming here to follow through on that slight break.

On the resistance side I redrew the SPX resistance trendline to include the last high, and that trendline is a very strong four touch resistance trendline. That is wedge resistance, and if we see SPX continue higher after a retest of the all time high then it is there that I would be expecting strong resistance. As I mentioned higher, the upper end of the normal topping range against the 45dma is currently in the 4804 area, and that resistance trendline is now in the 4800 area. If we see a test of that trendline then that will reconfirm that the wedge is still forming, and we should see a high form there to take SPX back towards that rising wedge support, currently in the 4500 area.

SPX 60min chart:

NDX is also looking interesting here, mainly because the H&S that broke down there never made the target in the 15,200 area, and that target is therefore still open unless and until the H&S fails, which would be on a break back up over the right shoulder high at 16,454.60. If we see that break, then the target from that break would be a retest of the all time high on NDX, so I'm watching that with particular interest.

NDX 60min chart:

In the short term there are three main options on SPX here, and decent arguments for all of them, though for obvious trading reasons I would prefer to see the test of the main SPX resistance trendline in the 4800 area.

The first option is that SPX has been doing wave B of an ABC bull flag sequence and is about to start a C wave down to a lower retracement low, before a likely all time high retest after that. If SPX is going with this option I would expect the B wave high very shortly.

The second option is that SPX is going to retest the all time high, and that is the second high of a double top that on a sustained break below 4495 would look for a target in the 4250 area. If SPX takes this option I'd be looking for a likely high before Xmas.

The third option is that SPX heads for that resistance trendline currently in the 4800 area, but rising of course. That would be the best fit with seasonality here and, if seen, I'd be looking for the sharp retracement in early January that is seen two or three times in most decades. This would be my preferred option as it would likely be the easiest and most profitable to trade.

A larger high may be forming here, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could be setting up for that backtest here and I'm watching for a possible larger topping pattern to form that could deliver that target.

We are doing a free public webinar at theartofchart.net  an hour after the RTH close on Thursday on the Big Five and Key Sectors and if you'd like to attend you can register for that here, or on our December Free Webinars Page.

The Daily Lower Band Ride

 ORIGINALLY PUBLISHED AT THEARTOFCHART.NET ON 3rd DECEMBER

The mean reversion move that I was looking for in my posts over the last two weeks has now completed, with SPX breaking below the 45dma, now at 4562. That is the main target for the move hit, though that doesn't mean that the low is necessarily in, or close. There are some signs that a low may be forming here, but as yet not enough  of those to suggest that this retracement is likely to be in yet.

SPX daily vs 45dma chart:

On the SPX daily chart the decline is a daily lower band ride and main resistance is the daily middle band, now in the 4660 area. Important short term support is at the 3sd lower band, now in the 4469 area with closes close to the 3sd lower band on both Tuesday and Wednesday. If hit, a close much below it would be rare, so any hit is likely a decent short term long opportunity.

How long can a daily band ride last? Well these can last a while actually, so I'm going to review the important levels and targets below.

SPX daily chart:

SPX made both the alternate double top targets I gave at 4540 and 4515, so the next and very important support level is rising support from the March 2020 low. On my daily charts it looks as though that has been hit but on the hourly chart below you can see that isn't yet the case, and I have that in the 4480-5 area. There is now a strong chance that will be tested.

If that support is broken, then there are no further targets below, but there is a possible H&S neckline and established support level at the October low at 4278 that might then be a possible target, particularly as Nasdaq has stopped trailing on the way down and has now been the weakest of the main US indices since the lows yesterday morning.

The daily RSI 14 sell signal has not yet made target but I would note the possible RSI 5 buy signal that is now brewing, which is one indicator suggesting that a retracement low on SPX may be close.

SPX 60min chart:

On NDX the daily RSI 14 sell signal is also not close to target yet, and the rising support trendline from the March 2020 low is now in the 15200 area. That is also of course the target on the H&S that I've been looking at on NDX since last week and which broke down early this week. With NDX now fully on board with this retracement that target is now looking more likely to be hit.

This is the H&S on NDX shown on the 15min chart. That has now made it more than halfway to the target at today's low, and the high quality support trendline shown on this chart that I was thinking might hold broke on the decline this morning. The corresponding high quality support trendline on NQ also broke, so that has cleared the main obstacle that might have prevented this target on NDX being hit. I would put the odds of hitting it now at over 50%. We'll see.

NDX 15min chart:

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could be setting up for that backtest here and I'm watching for a possible larger topping pattern to form that could deliver that target.

We our running our monthly public Chart Chat at theartofchart.net at 4pm EST on Sunday and obviously that's likely to be pretty interesting this month. If you'd like to attend you can register for that here. or on our December Free Webinars page. We look at the setup on equity indices there as well as the usual very wide range of other instruments. Particularly interesting looking setups on bonds, USD and silver if you are taking a look.

I've mentioned before that I'm developing a new daytrading room with my long term daytrading collaborator Paul Buckles. That's in late beta at the moment and I'm looking for a few more of my longer term readers who daytrade to come and join us while we are making this ready for market. Obviously there would be no charge and we will be explaining our methods, which are mainly mathematical, as we do this. For any who then want to join when we launch the room there will be a reward in the form of a special discount for them. If you're interested email me on springheeljack666 at gmail dot com.

Approaching Key Support

I was talking in my last post on Friday about the likely mean reversion move coming that should at least return SPX to a backtest of the 45dma, now at 4549. The low so far today has taken SPX down to the 4565 area, so that is getting close, and SPX is now in an area where it may turn back up, though I think a test of 4540 is likely at minimum before that happens.

SPX daily vs 45dma chart:

On the daily SPX chart the fixed RSI 14 sell signal is still well short of target, but doesn't need to reach target before a serious rally or high retest from the next low. The rising support trendline on SPX from the March 2020 low is currently in the 4485 area, and would be the next obvious big support level on a sustained break back below the 45dma, currently in the 4550 area.

SPX may struggle to go lower than the lows reached today as the 3sd daily lower band is currently at 4573, and the current LOD at 4565 was eight points below that. If we should see a close on or below the 3sd lower band today then that would be a strong sign that a short term low is in or very close.

SPX daily chart:

On the SPX 15min chart the open double top targets at either 4540 or 4515 areas are getting close.

SPX 15min chart:

On NDX the fixed daily RSI 14 sell signal is only halfway to target, and while the last retracement was led by tech, this one is being led by the Russell 2000 and Dow Industrials. That is promising for tech longs after this retracement ends.

NDX daily chart:

On NDX there is a large possible H&S forming on the 15min chart. I'm doubtful about that delivering much unless SPX can break below rising support in the 4485 area, but it is the kind of setup where the neckline would often break before a rejection back up into the highs.

NDX 15min chart:

The obvious target on SPX is the 4540 area and I think that will likely be tested in the next day or so. That would be a candidate low area. If broken significantly then I'd be watching the key support level on SPX at rising support from the March 2020 low, now in the 4485 area. I'm not expecting that to break on this move, but if it does that could open significant further downside.

I was saying on Friday that the historical stats yesterday leaned strongly bullish yesterday and bearish today and those both delivered. The next few days are modestly bearish tomorrow (Wednesday) and Friday. significantly bearish on Thursday, and leaning neutral to modestly bullish next week.

We are in the last couple of days running our annual Black Friday and Cyber Monday sale until midnight on Wednesday 1st December, with deep discounts on annual memberships at theartofchart.net, and if you are interested you can find out more about that here.

Thanksgiving Thoughts

 UPDATE NOTE - Since I wrote this post last night, SPX/ES has obviously broken down from the asymmetric double top there with alternate targets in the 4540 and 4515 (both SPX) areas, though so far, NDX/NQ has not yet broken down.

So far this week SPX has defied the historically bullish tape over Thanksgiving and that strong historical bullish bias extends into the close on Monday. I was leaning towards seeing at least a backtest of the 4540 SPX area after that but it looks like we may see that before.

MAIN POST - 

The big number on the equity index board at the moment is the high SPX made a few days ago at 5.54% over the 45dma, which closed Wednesday at 4538. SPX is likely topping out here for a reversion to mean move, and the mean I use is that 45dma, so I'm watching for a setup to take SPX back to that area.

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could well be setting up for that backtest here and I'll be watching the next retracement with great interest. If seen, and then followed by new all time highs, then this could fix an upside target on SPX in the 6500 area, so that might well be a bullish backtest of course.

SPX daily vs 45dma chart:

In my last post on Monday I was looking for a new all time high on SPX to add to the one already in place on NDX, and we saw that on Monday morning. That set a possible daily RSI 14 sell signal brewing on SPX, and that sell signal fixed at the close on Wednesday.

Since then SPX has defied the bullish stats this week and retraced to test the daily middle band, now at 4670, as support. If that breaks and converts to resistance then that reversion to the mean move may well be in progress.

SPX daily chart:

Is there a setup to deliver a move to that area in place? Yes, there is a decent quality double top setup formed here, shown on the 15min chart below. On a sustained break below 4630.86 the alternate double top targets would be in the 4540 or 4515 areas.

SPX 15min chart:

NDX has also been testing the daily middle band, currently at 16202, as support, and that has held so far. On a break and conversion to resistance the daily RSI 14 sell signal brewing on NDX should fix as well.

I'd note that the other two main US indices that I track, the Russell 2000 and Dow Industrials, are both considerably weaker than SPX and NDX, and are both currently holding their daily middle bands as resistance.

NDX daily chart:

Is there are setup to deliver a move lower in place on NDX? Yes, a possible H&S is forming, and a sustained break below the 16100 area would look for the 15550 area.

NDX 15min chart:

The historical stats for the Friday and Monday after Thanksgiving are impressively bullish so I'm doubtful about seeing much downside before the historically bearish last day of November on Tuesday, but that being said, the same could have been said on Monday morning, and the fast new high then died into a retracement that lasted into Wednesday.

A couple of things to mention before the weekend. Last weekend we did our monthly free public Chart Chat at theartofchart.net with a look into what we are seeing for the first six months of 2022, and if you'd like to see that you can see that here, or on our November Free Webinars page.

On Wednesday we did our monthly free public Big 5 & Key Sectors webinar at theartofchart.net, and if you'd like to see that you can see that here, or on our November Free Webinars page.

We are also running our annual Black Friday and Cyber Monday sale with deep discounts on annual memberships at theartofchart.net, and if you are interested you can find out more about that here.

Everyone have a great holiday weekend :-)

Options For Next High

 As I was saying in my last post on Monday, the all time high on SPX a few days before was at an impressive 5.54% over the 45dma and, excluding the spike up after the low last year, was one of the highest against the 45dma in the last decade. This is a good indication that SPX is topping out for at least a reversion to the mean move, that mean being the 45dma, currently in the 4517 area.

I was looking for retests of the high on SPX and NDX particularly to set possible daily RSI 14 sell signals brewing, and so far NDX has made a new all time high as expected, and ES (the SPX future) has also made a new all time high on Thursday night. SPX has failed to make a new all time high by less than one handle on Friday but we may well also see that on Monday, at which point a daily RSI 14 sell signal will also start brewing, joining the ones already brewing on ES, NDX and NQ.

SPX daily vs 45dma chart:

NDX looks very promising for a high being made in this area, as it punched 300 handles over the weekly upper band at the all time high made two weeks ago, and closed 280 handles above again on Friday. this has historically been an excellent indicator for at least a short term high being made or very close.

NDX weekly chart:

Are there any indications that equity indices might nonetheless break a bit higher in the short term. Yes, so there is a choice to be made here, as there so often is. On the RTY chart below you can see that while SPX/ES and NDX/NQ have been retesting the highs, a decent looking bull flag has been forming on RTY that may be setting up a high retest on RUT/RTY. If seen then a possible daily RSI 14 sell signal would start brewing there too.

RTY Dec 60min chart:

Exactly the same can be seen on and said of the Dow/YM chart. Again I am wondering whether this may be setting up a high retest.

YM Dec 60min chart:

Is there an obvious target above on SPX that I would be looking for in the event of a break higher next week? Yes. There is a clear resistance trendline above on SPX currently in the 2760 area, and if seen, I'd be looking for resistance there.

SPX 60min chart:

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could well be setting up for that backtest here and I'll be watching the next retracement with great interest.

We are running our monthly public Chart Chat at theartofchart.net today at 4pm EST and if you'd like to attend you can register for that here , or on our November Free Webinars page. We will be looking at the setup on equity indices here as well as the usual very wide range of other instruments. We will also be looking ahead into the first six months of next year.

There is another thing I'd like to mention. I'm developing a new daytrading room with my long term daytrading collaborator Paul Buckles. That's in late beta at the moment and I'm looking for a few of my longer term readers who daytrade to come and join us while we are making this ready for market. Obviously there would be no charge and we will be explaining our methods, which are mainly mathematical, as we do this. For any who then want to join when we launch the room there will be a reward in the form of a special discount for them. If you're interested email me on springheeljack666 at gmail dot com.

Mean Reversion Looks Close

The last high on SPX reached a few days ago was an impressive 5.54% above the 45dma, one of the highest readings in the last decade excluding the initial spike up from the March 2020 low, and slightly above the 5.4% reached at the early 2018 high. Coupled with the strong punch over the NDX weekly upper band then, that is a strong indicator that at least a short term high is being made, and I'm looking for a reversion to the mean move back to the 45dma, currently in the 4491 area.

SPX Daily vs 45dma chart:

The decline last week looks like a bull flag and, if so, that flag has likely broken up into what will likely be a full retest of the all time high at 4718.50. That full retest will set a possible daily RSI 14 sell signal brewing on SPX and, if also seen on NDX, IWM and INDU, would also set daily RSI 14 sell signals brewing on those.

SPX daily chart:

Could SPX go higher? Well I'd expect at least a marginal higher high, but if SPX goes much higher than that I'll be watching possible trendline resistance now in the 4750 area.

SPX 60min chart:

On NDX the obvious resistance trendline has already been hit and slightly overthrown so I'm doubtful about much more than a high retest there.

NDX daily chart:

Could a larger high be forming here? Yes, and I'd refer back again to the backtest scenario that I was looking at in my post on Friday 6th August. This could be setting up for that backtest here and I'll be watching the next retracement with great interest.

We ran our monthly public Chart Chat at theartofchart.net yesterday and if you missed that you can see that here, or on our November Free Webinars page. We look at the setup on equity indices there as well as the usual very wide range of other instruments. Particularly interesting looking setups on bonds, USD and silver if you are taking a look.

There is another thing I'd like to mention. I'm developing a new daytrading room with my long term daytrading collaborator Paul Buckles. That's in late beta at the moment and I'm looking for a few of my longer term readers who daytrade to come and join us while we are making this ready for market. Obviously there would be no charge and we will be explaining our methods, which are mainly mathematical, as we do this. For any who then want to join when we launch the room there will be a reward in the form of a special discount for them. If you're interested email me on springheeljack666 at gmail dot com.

Another Day, Another Inflection Point

I was saying yesterday that I was expecting the decision in yesterday's inflection point to be made fairly quickly and so it was. The smaller NDX H&S pattern I showed broke down at the open this morning and has now made target.

NDX 5min chart:

That has completed the larger H&S pattern on the hourly and daily charts and that has broken down slightly with a target in the 13840 area. The important rising support trendline from the March 2020 low has broken this morning so the way to that H&S target is now open although ........

........ as my longer term readers will know every time one of these H&S or double tops breaks down there is a new inflection point where the market can reject back into the previous high. The marker on an H&S is at the right shoulder high, so a break back over 15345.90 at this stage would trigger a high probability target at a retest of the all time high. Something to be aware of.

NDX 60min chart:

On SPX the next obvious trendline support is at possible falling wedge support, currently in the 4285 area. A break below opens the possible H&S neckline target in the 4250 area, which would be my preferred target area for this move.

SPX 60min chart:

On the SPX daily chart possible support at the daily middle band at 4345 is being tested at the time of writing and I would note that the daily 3sd lower band is currently at 4297 which tends to be a strong support level and may mean that the 4250 area is hard to reach before next week. If we see a punch below it into the ideal target area, then then would normally be followed by at least a strong rally.

SPX daily chart:

On the SPX bigger picture today has seen the weekly middle band, currently at 4361, tested for a second week, making this the second time that has been seen since the March 2020 low, with the other instance being in October 2020 just before a serious low. That is possible support, and adds to the NDX H&S inflection point here.

SPX weekly chart:

There is a possible inflection point here but it will likely break. The next big inflection point on SPX looks likely to be in the 4230-50 area. If that target is reached this week we would likely see at least a big rally start there. If that larger H&S on SPX is forming, then the ideal right shoulder high would be in the 4470 area, which therefore may be tested again in the not too distant future.

An hour after the close on Thursday we are holding our monthly free public webinar on on the big five and key sectors at theartofchart.net and will looking at the usual six big tech stocks and eleven sector ETFs, many of which are looking particularly interesting here. If you'd like to attend you can register for that here, or on our September Free Webinars page.

There is another thing I forgot to mention in my post yesterday, and that is that every few months we run a Trader's Boot Camp trading course at theartofchart.net, and the next one is starting next week. In my view this both one of the best and cheapest online trading courses available anywhere and if you're interested you can look at that here.

Nasdaq Setting Direction Here

I haven't written a post since 1st September as I've been immersed in divorce paperwork again. That should all be finished within a few days, and that should be the last serious work that needs to be done in my quest to be single again, which will be a relief. This should therefore be the last long gap in my posts.

In my last post I was talking about the likely retracement to the mean move that I was expecting to see soon, and we have seen that move. The level I am using for that, the 45dma, is currently at 4462 and SPX is backtesting that from below at the moment, having delivered one of the only four retracements in the last eighteen months to deliver a retracement significantly below that.

Is there more coming and could this be the first really significant retracement since the March 2020 low? Maybe, but bears will need to jump through a few more hoops to really open the downside. There is a decent possibility here though that what we have seen in the last three weeks may be the start of a larger retracement that could deliver a move back to the 3800 area that I was looking at in my post on Friday 6th August.

In the short term SPX has rallied back to test the daily middle band as resistance and there is a decision to make there. A break and conversion to support of the daily middle band, currently at 4469, opens a retest of the all time high. A break and conversion of 4400 to resistance opens a possible next leg down into the next big support level at the July low and possible H&S neckline in the 4233 area.

SPX daily chart:

It has been a while since I've mentioned the SPX 5DMA Three Day Rule, and that is because retracements in the last eighteen months have been infrequent and muted, but SPX broke back over the 5DMA on Thursday and today is the third and last day on the rule. A clear close back below the 5DMA (currently 4421) by the close today signals a very high probability that the current retracement low at 4305.91 would then be retested soon afterwards.

SPX daily 5DMA chart:

I would say though that one reason that this retracement looks so promising to deliver the first decent retracement since March 2020 is that NDX has, after a slow start, been leading the way down. On the hourly chart below you can see that NDX may be making a right shoulder on a large H&S pattern. A break down below the neckline could therefore trigger a much larger retracement than we have seen so far.

I would note though that the retracement low was a high quality test of rising support on NDX from the March 2020 low. If that support holds then the obvious next target on NDX would be that rising wedge resistance, currently in the 15,950 area.

NDX 60min chart:

Looking at the structure of the rally on NDX from the current retracement low, there is a second, smaller possible H&S forming that may also currently be forming a right shoulder. A sustained break below the H&S neckline in the 15215 area would look for a retest of the current retracement low, which would in turn complete the larger H&S pattern and test the neckline on it.

NDX 5min chart:

The big H&S forming on NDX isn't the only one though. There is another forming on the Dow Industrials supporting it, and until we see a sustained break back over the daily middle band on SPX I will be taking both of these patterns seriously.

INDU 60min chart:

As I was saying in my last post, the ideal time period for that larger retracement is into the end of October . That is only five weeks ago now, so if equity indices are heading lower, I would expect that to start soon.

An hour after the close on Thursday we are holding our monthly free public webinar on on the big five and key sectors at theartofchart.net and will looking at the usual six big tech stocks and eleven sector ETFs, many of which are looking particularly interesting here. If you'd like to attend you can register for that here, or on our September Free Webinars page.

Rising Wedges And Mean Reversions

I was looking at the tests of the main resistance trendlines on SPX and ES on Monday, and at the possibility that SPX might turn down there. Instead it broke through, dragged upward by tech stocks, and the very nice daily RSI 5 divergence on both SPX and NDX was lost.

On both SPX and ES, price is now slightly above the main resistance trendlines in what may be a bearish overthrow.

SPX daily chart:

In the short term there is now a very clear rising wedge from the mid-August low at 4367. The rising wedge support trendline was confirmed with a perfect third touch at the intraday low on SPX yesterday, and I posted it shortly after that on the private twitter feed at theartofchart.net shortly after that, with the observation that unless that wedge support trendline broke, I was looking for at least a retest of the all time high, with the intraday high today just short of that so far.

If SPX continues upwards then that wedge resistance is now in the 4560-5 area. If SPX breaks the wedge after a marginal new all time high then decent negative divergence will have been re-established on the hourly RSI 14.

SPX 60min 2Mo chart:

Is there a a decent case for getting as high as the 4560-70 area on this move? Well there is an argument that there is another target trendline up there. Breaking down the move from the low on SPX in March 2020 into the three obvious waves, the third one started in September 2020 at the second wave triangle low at 3209.45, with the current support trendline starting from the early November low at 3233.94.

From that low there is a decent looking possible rising wedge as well, and the most obvious resistance trendline for that wedge is currently in the 4570 area.

SPX 60min 13Mo chart:

I was looking at mean reversions on SPX a year ago, and was noting that the usual levels reached above the 45dma before a reversion back to it historically tended to be in the 3% to 4% area, but had expanded after the March 2020 low as high as the 8% to 9% area.

Since the September 2020 high that has reverted back to normal and of the six retracements back to the 45dma this year, all were in the 3% to 4.25% range above the 45dma at the preceding high. At the current all time high that would be towards the bottom end of that range in the 3.1% area. If we see a move to the 4570 area that would be close to 4%, still in that range. The 45dma is now in the 4410 area, effectively at rising wedge support from the November low, making that the key level that has to be broken and held to open a larger retracement.

I've drawn a draft elliot wave structure in patterns on the chart below. The first wave was a rising wedge from 2191.86 to 3588.11. The second wave was a clear triangle and the third wave is a likely rising wedge from 3209.46 to 4537 so far. All decent patterns and suggesting that we may need to see a fourth wave (non-triangle as wave 2 was a triangle) retracement soon, and then a wave 5 up before we see the strong retracement that might deliver the 3800 area backtest I've been looking at. We'll see.

SPX daily vs 45dma chart:

Right now there is a case for a reversal from a full retest of the SPX all time high, not quite hit so far today, as there would then be a decent possible small double top setup and possible hourly RSI 14 sell signals brewing on both SPX and NDX. If not, then we may see a move directly up to the double trendline target in the 4570 area later this week.

The free public webinar scheduled for last Thursday had to be delayed a week and is now scheduled for an hour after the close tomorrow on Thursday 2nd September at theartofchart.net and will looking at the usual six big tech stocks and eleven sector ETFs, many of which are looking particularly interesting here. If you'd like to attend you can register for that here, or on our August Free Webinars page.

A Moment Of Truth

 I've been looking at the resistance trendlines on ES and SPX over my last few posts, and the scenario I was looking at in my post on Friday 6th August that we may be seeing the start of a retracement here that could deliver a 3800 area retest. I was saying that we might well see more highs before that main move started and we've seen that.

One resistance trendline that I wasn't looking at was the rising wedge resistance trendline that has developed over recent weeks and ES is testing that too. Possible daily RSI 5 sell signals are now brewing on ES, SPX and NDX.

ES Sep daily chart:

On the hourly chart SPX is testing rising wedge resistance from the March 2020 low ..........

SPX 60min 20Mo chart:

.......... and the wedge resistance trendline from the November low, which is part of the larger wedge resistance trendline.

SPX 60min 10Mo chart:

Weekly RSI 14 and RSI 5 sell signals have already fixed on SPX.

SPX weekly chart:

The NDX resistance trendline hadn't quite been touched when I captured this chart at the weekend but has had a perfect test shortly after the open this morning.

NDX 60min chart:

So there we have it. Resistance trendlines hit, High quality negative divergence. Everything needed for a high except, so far, the actual turn. Hard to overstate the importance of that of course. We'll see now if we get that, but the setup is certainly looking good.

The free public webinar scheduled for last Thursday had to be delayed a week and is now scheduled for an hour after the close on Thursday 2nd September at theartofchart.net and will looking at the usual six big tech stocks and eleven sector ETFs, many of which are looking particularly interesting here. If you'd like to attend you can register for that here, or on our August Free Webinars page.

Testing SPX Rising Wedge Resistance Again

I was saying in my post last Thursday that if support was found at the levels being tested then, the next target within the rising wedge would be wedge resistance in the 4500 area, and well, here we are.

Now we are back at the daily upper band, and testing a wedge resistance trendline that has already held several times. The chances are that SPX is making another high here, setting up a pattern that can take us lower again than the last decline, so that is what I'll be looking at today.

In terms of the wedge itself, it is high quality, with an excellent resistance trendline that is unlikely to be broken significantly unless we are going to see a bearish overthrow, not uncommon at a significant high on wedges, or unless the wedge breaks up with a target in the 6800 area which sounds crazy, but really the market went through crazy without a backward glance a while back so it can't be ruled out altogether.

SPX daily chart:

The main rising wedge support from the March 2020 low was tested at that low last week and it is that rising wedge resistance that is now being retested. No high quality RSI 5 sell signal forming yet on the hourly but there is now negative divergence here ........

SPX 60min 20Mo chart:

........... that you can see more easily on the ten month hourly chart.

The rising support from November 2020 was not hit at the last low, but the resistance trendline shown below is the one on the wedge from the March 2020 low.

SPX 60min 10Mo chart:

In terms of the topping setup here, there is now a very decent quality possible double top setup that on a sustained break below last week's low at 4367 would look for a target in the 4245 to 4255 area. I think there is a very decent chance that setup delivers, though I think SPX might kick around here making this swing high for another two or three days first.

SPX 15min chart:

Just looking at the SPX weekly chart quickly, there are fixed sell signals on both RSI 14 and RSI 5 already of course, and I would note that the last time the weekly middle band was broken was ten months ago. That is the key level of support above that double top target, and the key level to be broken and converted in the event that my scenario for a backtest of the 3800 area that I outlined in my post on Friday 6th August is to have a chance of playing out. The weekly middle band is currently at 4296.

SPX weekly chart:

Overall I am really liking the odds of a decent retracement here, though it might be that would find support at the weekly middle band and return to the highs again. What I would say though is that the ideal time to do that would be into the end of October, and that is now only two months away.

An hour after the close on Thursday we are holding our monthly free public webinar on on the big five and key sectors at theartofchart.net and will looking at the usual six big tech stocks and eleven sector ETFs, many of which are looking particularly interesting here. If you'd like to attend you can register for that here, or on our August Free Webinars page.