The Next Inflection Point

I remember a reader describing me a few years ago as an 'if, then' analyst, and that was a pretty decent description, as nothing is ever certain and markets move from one inflection point to the next, where there is another 'if, then' decision to be made.

I was talking in my last post about the possibility that SPX would break up into a high retest, and it did, so the H&S is no longer forming, and the setup on SPX is now a possible nested double top setup. I went though decades of charts on SPX a few years ago and calculated that some 70% of highs and lows on SPX were some kind of double top or bottom so that isn't necessarily bullish so far.

In the short term a very decent quality rising wedge has formed from the last low at 4164, so I'm expecting that to break down and at least deliver a retracement. If we see a retracement back to the 4164 low, that is now double top support on the smaller of the two nested double top setups.

SPX 5min chart:

Looking at this inflection point, there are two obvious options on SPX.

The bearish option is that SPX breaks down here into a likely retest of the 4000 area, with the target on the larger of the two nested double top setups looking for a retest of the 3830-50 area if that full target was to be reached.

The bullish option is that SPX and NDX break up over this resistance area and the obvious target on SPX would be the wedge resistance trendline on the rising wedge from the March 2020 low that broke the rising support trendline at the recent lows. That trendline is now in the 4375-4400 area, so that is quite a distance higher. If that trendline is reached I would then treat that as a wedge expansion and redraw the wedge support trendline through the last low and the wedge would return to being unbroken.

The bearish setup for the retracement here is very nice and with the Fed likely to start tapering soon this seems a good time to correct, but at the end of the day price makes all decisions, we'll see. If we are going with the bullish option we could see a reversal down here that went as low as the 4130-40 area and still then reject into that target area. We will see.

SPX 60min chart:

I mentioned in my last post that there was a possible IHS forming on RTY that I would be taking more seriously if SPX failed to reverse downwards this week. That is oversized but has now broken up with a minimum target, if the break up is sustained, at a retest of the June high, and is now getting close to that target.

RTY Sep 60min chart:

Since my last post an (also oversized but still valid) IHS has also formed on YM and broken up with a target at the late May/early June high and that too may make that target.

YM Sep 60min chart:

As I mentioned last week, this week is one of the most historically bearish weeks of the year on SPX, but has now been largely wasted. With last Friday being a notable exception, large moves on Fridays tend to be bullish. We are still however about to start the most bearish four months of the year on NDX. If we are going to see the decent retracement that is setting up here, this is still a good time time to do that. We'll see how that goes.

Last Friday's commodity webinar was delayed until Thursday 24th June, so we will now be doing a double bill of free public webinars at theartofchart.net tonight starting an hour after the close.

Those two webinars will be firstly the monthly Big Five and Key Sectors webinar covering AAPL, AMZN, FB, GOOG, NFLX, TSLA and eleven sector ETFs. If you'd like to attend you can register for that here.  The second webinar, starting half an hour after the first, is the commodity trading webinar. As usual we will be looking at three promising trade setups and designing three options setups to trade those. You can register for that here, and the registration links and recordings for that and the other free webinars this month are also of course on our June Free Webinars page.

We also run an annual July 4th sale at theartofchart.net with an additional 20% off the already discounted price for annual memberships, giving effectively four free months on an annual membership until the sale ends. If you're interested the sale page is here, and remember you need to enter the sale code JULY4SALE in the checkout process.

I may do another post tomorrow depending on what SPX does in the meantime.

A Lot Of H&S Patterns Forming

 I was looking at something unusual in my premarket video at theartofchart.net this morning and that was a large number of H&S patterns both bearish and bullish. I don't generally post my work here outside the equity indices but I'll make an exception today as these are worth a look, and all really coming out of the reaction last week to the Fed indicating that tapering of COVID measures is starting soon in the US.

The first of course is the possible H&S forming on SPX that I was writing about yesterday. This is in the ideal right shoulder area and SPX is now in the inflection point seeing if this will now break down. If it doesn't I'll be looking for the high retest, but the historical stats and setup here are favoring a break down.

SPX 15min chart:

There is also a really nicely set up H&S forming on DX which may well complete and break down here. A sustained break below 91.80 would look for the 91.20 area.

DX Sep 60min chart:

The H&S forming on ZB is less clear, and it is hard to tell whether the right shoulder is currently forming, or has already formed and broken down and may be failing. A great target area on a sustained break down though at a retest of the early June low at 155'16.

ZB Sep 60min chart:

The smaller IHS on HG (copper) has already broken up with a target in the 4.35 area. Again a very nicely formed pattern.

HG Jul 60min chart:

There are other H&S patterns that I haven't included here. There are decent quality H&S patterns on EURUSD and GBPUSD that has already broken up like HG. There is also a decent quality possible IHS forming on RTY that on a sustained break would have a target back at a retest of the June high there and open a possible retest of the all time high just above that. If SPX breaks higher here I'll be showing that on my next post.

As I mentioned last week, this week is one of the most historically bearish weeks of the year on SPX, and in a few days we will be starting the most bearish four months of the year on NDX. If we are going to see the decent retracement that is setting up here, this is the ideal time to do that. We'll see how that goes.

Last Friday's commodity webinar was delayed until Thursday 24th June, so we will now be doing a double bill of free public webinars at theartofchart.net on Thursday starting an hour after the close.

Those two webinars will be firstly the monthly Big Five and Key Sectors webinar covering AAPL, AMZN, FB, GOOG, NFLX, TSLA and eleven sector ETFs. If you'd like to attend you can register for that here.  The second webinar, starting half an hour after the first, is the commodity trading webinar. As usual we will be looking at three promising trade setups and designing three options setups to trade those. You can register for that here, and the registration links and recordings for that and the other free webinars this month are also of course on our June Free Webinars page.

We also run an annual July 4th sale at theartofchart.net with an additional 20% off the already discounted price for annual memberships, giving effectively four free months on an annual membership until the sale ends. If you're interested the sale page is here, and remember you need to enter the sale code JULY4SALE in the checkout process.

Assuming that the rest of the week is interesting, I'm planning at least one more post.

SPX Topping Options

Friday was very weak, particularly for a big opex Friday, and SPX broke down through the daily middle band, currently 4215 area, the 50dma, currently 4183 area, and on ES even briefly broke down below the monthly pivot. We are seeing a rally this morning and I was giving the ideal rally high area on my premarket video at theartofchart.net in the 4230-5 SPX area. The odds look good for a reversal there into lower lows.

SPX daily chart:

On my premarket video on Friday that I posted on my personal twitter on Friday morning I was looking at an ideal low for Friday at a possible H&S neckline. That low was made in the right area and SPX is likely rallying here to form the right shoulder on that pattern. I'm showing that possible pattern forming on the SPX 15min chart below. On a sustained break below the last low at 4164 the H&S target would then be in the 4070-5 area, slightly above main double top support at 4061. That is a level I'm expecting to break, though we'll have to see after that whether that then heads down to the double top target in the 3865 area, or rejects back up into the highs.

SPX 15min chart:

So far at least, there hasn't been much weakness on NDX, and I am expecting that to break down too. There is a really nice short term rising wedge there though, and after a possible high retest here I'm expecting that to break down.

NDX 15min chart:

As I mentioned last week, this week is one of the most historically bearish weeks of the year on SPX, and in a few days we will be starting the most bearish four months of the year on NDX. If we are going to see the decent retracement that is setting up here, this is the ideal time to do that. We'll see how that goes.

Last Friday's commodity webinar was delayed until Thursday 24th June, so we will now be doing a double bill of free public webinars at theartofchart.net on Thursday starting an hour after the close.

Those two webinars will be firstly the monthly Big Five and Key Sectors webinar covering AAPL, AMZN, FB, GOOG, NFLX, TSLA and eleven sector ETFs. If you'd like to attend you can register for that here.  The second webinar, starting half an hour after the first, is the commodity trading webinar. As usual we will be looking at three promising trade setups and designing three options setups to trade those. You can register for that here, and the registration links and recordings for that and the other free webinars this month are also of course on our June Free Webinars page.

We also run an annual July 4th sale at theartofchart.net with an additional 20% off the already discounted price for annual memberships, giving effectively four free months on an annual membership until the sale ends. If you're interested the sale page is here, and remember you need to enter the sale code JULY4SALE in the checkout process.

I'm expecting this to be an interesting week. If so, I'll likely do further posts this week on Wednesday and Friday.

NDX Topping Setup Completes

 I had a couple of overhead targets that I was looking for this week, and the chances of making the ambitious one on SPX in the 4350 area finally withered and died with the hawkish FOMC comments yesterday.

The more important one was on NDX however, and that has completed as expected this week, with the final part of the topping setup there completed with the new all time high today.

There is now a very attractive nested double top setup there, and a possible daily RSI 5 sell signal is brewing.

NDX daily chart:

SPX made the minimum bull flag target at the retest of the all time high, but needed a hard break over the 4250 area to open the possible move to main rising wedge resistance now in the 4350 area. That never happened, and as this bullish opex week draws to a close, and we approach next week, which is one of the most historically bearish weeks of the year, the next likely issue is whether SPX can hold main rising wedge support, currently in the 4170 area. That wasn't quite tested at the lows today.

SPX daily chart:

Tomorrow is opex Friday and leans neutral. We may or may not see a move of any interest tomorrow. In the short term on SPX today has been an extended test of short term trend support/resistance at the 50 hour MA, currently at 4236. I'm also watching the daily middle band as support, currently in the 4214 area.

SPX 60min chart:

Next week, as I mentioned, is historically one of the most bearish weeks of the year, and the start of July the week after that will start the most bearish four months of the year historically on NDX. We may be watching a significant high forming on NDX this week, and if SPX breaks rising wedge support next week, then the topping setup is looking pretty attractive on SPX as well.

We are running a commodity trading webinar at theartofchart.net has been an hour after the close tomorrow Friday 18th June. As usual we will be looking at three promising trade setups and designing three options setups to trade those. You can register for that here, and the registration links for that and the other free webinars this month are also of course on our June Free Webinars page.

Onwards And Upwards

 On my last post I was looking at the setup for a backtest of the daily middle band, and SPX delivered that and has then rallied back almost to the all time high retest, which I'm expecting to happen ideally today or tomorrow, as the historical stats for Wednesday and Thursday this week lean significantly bearish.

SPX daily chart:

If the SPX all time high is broken with force, then the main upside target is the wedge resistance for the rising wedge from the March 2020 low. That is currently in the 4320 area but it is going to take a strong push over the SPX all time high to make that the main target for now.

SPX 60min chart:

The main target for now is the wedge resistance on the rising wedge from the May lows. That rising wedge support is now in the 4195 area, and resistance currently in the 4255 area. Both support trendlines are rising of course.

SPX 15min chart:

The June free public Chart Chat at theartofchart.net has been scheduled for next Sunday 13th June. You can register for that here, and the registration links for that and the other free webinars this month are also of course on our June Free Webinars page.

A Strange Start To June

 June is not a bullish month historically on SPX, but it does have some bullish leaning days. Today, the second trading day of the month, is historically the strongest day of the month, with 76.2% green closes on SPX. Yesterday runs equal with Tuesday 15th June for second most bullish day of the month with 66.7% green closes.

Now these don't always deliver by any means, as if they did the averages would all be 100%, but in a setup where there is obvious unfinished business above at the retest of the all time high on SPX, they generally would, so it is interesting that as the second trading day of June draws towards the close, there is little sign so far of the bulls showing up for work.

Just to review the overall position here. SPX is in a high quality rising wedge from the March 2020 low. Wedge support is currently in the 4110 area and wedge resistance currently in the 4310 area. The next obvious target is a retest of the all time high on SPX, and if SPX continues higher then the next trendline resistance within that rising wedge is that rising wedge resistance, now in the 4310 area, and rising of course.

SPX 60min chart:

On the daily charts on SPX (and Dow Indu) there are daily RSI 14 sell signals fixed, but I'm expecting those to make target after the swing high for the current move is made, and that is likely still a few days away. In the meantime the main short term support is at the daily middle band, currently 4170 area, and the monthly pivot at 4166.

I am wondering whether we might be about to see a test of that support, and there is a setup here that might deliver that.

SPX daily chart:

I am showing this setup on ES , but there is a similar H&S on SPX that on a sustained break below 4197 would look for a target in the 4160 area. Both H&S patterns are close to completing the right shoulders and breaking down. If they do, then there is an inflection point where either the tape can continue down towards the target, or reject back up into another all time high retest.

After the break down, a subsequent break back over the right shoulder high at 4217.36 would fail the H&S and set up a strong target back at this week's high just under the all time high.

Either way, from the historical stats, the obvious time window to see the next swing high is in the week leading up to triple witching on Friday 18th June, as the week after that leans strongly bearish.

ES Jun 60min chart:

As I have a rare visitor up for lunch on Sunday we have delayed the free public Chart Chat for June at theartofchart.net until Sunday 13th. I'll be posting the links once we schedule that.