Very Important Resistance Area Here

The possible H&S I was looking at on Friday morning didn't form and the move to retest the prior high has done some interesting technical damage to the bear case, so I wanted to have a look at that this morning.

The SPX hourly chart below shows the break over declining resistance from the all time high, which held perfectly at the December highs and established a high quality three touch resistance trendline.

On the bigger picture there is also a decent case that a falling wedge has formed from the all time high on SPX that could be a bull flag. That flag wedge would have underthrown bullishly at the October low and this might therefore be the start of a break up towards a possible retest of the all time high.

For a variety of reasons I am skeptical about that happening here but this is nonetheless certainly an interesting development and I'll be watching carefully to see whether this can follow through to the upside and convert the main downtrend resistance, which is of course the 50 week moving average.

SPX 60min chart:

The possible bull flag on NDX is nowhere near as convincing, but there was also a break over declining resistance from the all time high on NDX yesterday.

NDX 60min chart:

Main resistance for the current downtrend of course is at the 50 week MA, and there were close touches of this at the August and December rally highs. That is now at 4030.04 so the high yesterday was another close touch. If bulls can break and convert this to support then the possibility of a retest of the all time high will become an option on the table.

SPX weekly chart:

In the short term SPX is retesting the daily upper band so there is some resistance here. No current negative divergence on the hourly chart but that could be easily fixed with a retest and fail at yesterday's high.

SPX daily BBs chart:

On the 15min chart the obvious pattern from the December low is a rising megaphone and, if so, the obvious resistance trendline would be in the 4080-5 area at the moment. Obvious SPX could be on the way to a retest of the December high and, if so, that is another potential point of failure, setting up a possible double top to retest the October low. We'll see.

SPX 15min chart:

How significant is this resistance break? Well even if the 50 week MA breaks and converts to support, a retest of the all time high is not the only option. SPX might just be establishing a new rally resistance trendline and, if seen, I have a possible channel resistance trendline not far above the December high that I'd be keeping an eye on.

We are are holding our monthly free big five and key sectors webinar an hour after the RTH close at 5pm EST on Thursday 26th January. If you'd like to attend you can register for that here or on our January Free Webinars page.

My next post should be on Thursday or Friday before the open.

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Turning As Expected So Far

I'm finding it difficult to get back into doing more than one post a week. I shall try hard to get two out next week.

On SPX a week ago I was looking for a reversal under declining resistance from the all time high, and ideally a decline and high retest to set up a possible daily RSI 5 sell signal. I got the first of those but not the second.

The decline from the high was too large to set up the RSI 5 sell signal and as time goes by, unless we are going to see a break of declining resistance from the all time high, a high retest is looking less likely as soon it might need to break that resistance to retest the current high.

Unless we are going to see that break then the short term high is likely made, and I'm watching a possible H&S pattern that may well be forming here with a target that would take SPX back to the last short term low at 3764.99.

SPX daily chart:

On the weekly chart main resistance at the 50 week MA held again, currently at 4036.42, and if the short term high is made then then next obvious target is another test of main support at the 200 week moving average, currently at 3568.75. If bears can manage to break and convert this to resistance then this would open potentially much lower targets.

SPX weekly chart:

In the short term SPX is rallying at the daily middle band, now at 3881.54, which is the obvious level to see a rally. If the short term high is in, this will then need to be broken and converted to resistance to open up lower targets.

SPX daily BBs chart:

The hourly RSI 14 sell signal that was brewing last week fixed and made target. No buy signal at the low larger than the weak RSI 14 buy signal that has fixed on the 15min chart.

You can see that declining resistance from the all time high is now in the 4025 area, just a few handles above the January high so far at 4015.39.

SPX 60min chart:

What I think may well be happening here is that this rally is establishing a right shoulder on a possible H&S that if it forms and makes target would look for a retest of the December low at 3764.49. Ideally the right shoulder high would be in the 3950 area and I will be looking for a possible high there.

SPX 15min chart:

We are are holding our monthly free big five and key sectors webinar an hour after the RTH close at 5pm EST next Thursday 26th January. If you'd like to attend you can register for that here or on our January Free Webinars page.

I will endeavour to ensure that my next post is on Tuesday or Wednesday before the open. Everyone have a great weekend. :-)

If you are enjoying my analysis and would like to see it every day at theartofchart.net, which I co-founded in 2015, you can register for a 30 day free trial here. It is included in the Daily Video Service, which in turn is included in the Triple Play Service.

Friday The Thirteenth

I mentioned in my post a week ago that on a break back over the daily middle band there were fixed buy signals on the daily and hourly charts that might carry SPX significantly higher and so it was, with SPX hitting 3997 at the high yesterday, and those buy signals have now all made target. I'm looking for signs of a high forming, and there are some signs here.

There is no negative divergence on the daily chart here yet, so I'm thinking we might see a sharp retracement here back into the daily middle band, currently at 3868, then retest the high to set up a possible double top.

SPX daily chart:

On the 15min chart there was a sloppy IHS that broke up with a target in the 3400 area, and the high yesterday was close enough that I'm treating that target as reached.

SPX 15min chart:

On the hourly chart both RSI 14 and RSI 5 sell signals may be brewing here, and looking at the overnight action both of those may fix at the open. There is a possibility of course that the high for this move was made yesterday. If so I'll be watching the possible H&S necklines in the 3940 and 3880 areas.

You can see that declining resistance from the high is now in the 4035 area. I would be surprised to see that broken after the perfect hold at the rally high in December. If that is going to hold as resistance on this move then this short term high is close or already made.

SPX 60min chart:

On the weekly chart main resistance for this downtrend is at the 50 MA, and that is now in the 4047 area, just above declining resistance. Unlike declining resistance from the all time high, that would be more complex to break, needing a break and conversion to support, but both major rallies last year failed there almost exactly.

SPX weekly chart:

If we have already seen the high on the short term move, the clear signal that it was finished would be a break and conversion of the daily middle band, now at 3868. If this retracement gets that far then I'll be watching that carefully.

SPX daily BBs chart:

We held our free monthly public Chart Chat at theartofchart.net last Sunday and we included our forecasts for 2023 on a wide number of indices and sectors, as well as our top picks for the year. If you'd like to see that you can see it here, or on our January Free Webinars page.

Today is one of the rare trading days to fall on Friday the Thirteenth. Is that significant? I've been watching these for quite a while and, as they seem to trade much like any other Friday in the main, not particularly.

My next post should be on Monday or Tuesday before the open. Everyone have a great weekend. :-)

Much Ado About Nothing

I had an interesting December with a nasty case of COVID after I moved, and a slow and intermittent recovery. Feeling better now and I lost a stone over the month so my January diet was at least cancelled. :-)

So where are we now on SPX after the rally from the low in mid-November? Well I was watching for resistance breaks on the upside and, so far at least, there haven't been any on SPX.

On the SPX hourly chart below you can see that the rally high was a perfect touch of declining resistance from the all time high. The hard fail there that just confirmed the downward trend.

SPX 60min chart:

On the weekly chart the last rally failed at the test of the 50 week moving average and, so far, that is exactly where this rally has failed too. Again, so far this is just confirming the overall downward trend and the next obvious bigger picture target is a lower low below the last low at 3491.58.

There is a complication though. The obvious main resistance on the weekly chart is at the 50 week MA, now at 4056.69, but the obvious main support is at the 200 week MA, now at 3673.91. That was broken briefly when the last low was made, but there was no close significantly below it. As this has been the main support on SPX since 2009, and the only significant break below it since 2011 was during the 2000 crash, I am treating this as the key support level on SPX. If this is broken and converted to resistance then a lot of lower targets are opened up as serious possibilities.

SPX weekly chart:

On the daily chart I would note that a daily RSI 5 buy signal has fixed, so if we see a confirmed break back over the daily middle band then there is a possibility that we may see a short term run higher.

On the downside though, if SPX makes a lower low under 3491 then there is still off course an open H&S target in the 3400 area that would be very much in range. I've been looking carefully at possible support trendlines and unfortunately I don't have a high quality target trendline, but the best I have is currently in the 3350 area. That trendline needs confirmation but I'll be bearing it in mind.

SPX daily chart:

For today I would note that the daily middle band is currently at 3874 and is being tested at the moment. If we see a clear break above now that is confirmed with another close above on Monday then there is enough positive divergence here on the daily and hourly charts to see a possible rally to the upper band in the 4000 area, but until we see that happen the daily middle band is an obvious level to reverse back down.

SPX daily BBs chart:

On the 15min chart the action from the last short term low at 3764 could be a triangle forming, but either way it looks like a bear flag forming. That has me leaning towards a reversal back down from the highs today.

SPX 15min chart:

It's great to be back and mostly recovered. I'm not often ill and I really dislike it. Planning to resume my normal schedule from here.

A couple of things to mention and the first is that we are holding our free monthly public Chart Chat at theartofchart.net at 4pm EST on Sunday and we will be making some forecasts for 2023 on the many different indices, commodities etc that we cover there. If you'd like to attend you can register for that here or on our January Free Webinars page.

The second thing is that today is the last day of our holiday sale, so if you'd like to buy an annual membership then today is the day. If you're interested then you can find the page for that here.

My next post should be on Monday or Tuesday before the open. Everyone have a great weekend. :-)