The Importance of Trendlines

My apologies for the lack of posts so far this week. I've not been feeling great and it's been a struggle just to keep up with my daily output for subscribers at theartofchart.net. Planning to resume these posts on a daily basis from this post today.

Last Friday NDX/NQ broke a strong resistance trendline, and that has opened up higher targets, not so much on NDX/NQ, though I have a longer term resistance trendline on NDX in the 6000 area that I will definitely be watching with great interest if reached. NDX 60min chart

The next really interesting trendlines however are on SPX, as the initial rising wedge has clearly now evolved into a rising channel with the channel resistance trendline currently in the 2550 area, so in the absence of a break below channel support, currently in the 2380-5 area, that will remain a possible target. That's not the only, or even the best, target above, as there are also two possible alternate wedge resistance trendlines above, with the lower trendline also the rising wedge resistance trendline on the bigger picture wedge from the early 2016 low. That would be the most likely target here and I have that currently in the 2485 area.

I was talking about this setup in my premarket video at theartofchart.net this morning and have cut a five minute clip from there where I am looking at all five of the charts used in this post. You can see that clip here. In that clip I refer to a setup on GC that I was looking at on Monday morning showing the three good trendline options there that were making me doubtful about seeing a high in the 1280s. The third and highest trendline option was tested a few hours later so just sayin'. You can see that three minute GC clip from my premarket video on Monday here.

SPX 60min chart:

The ES and NQ futures charts below were done before the 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 treating yesterday's low as a solid candidate for the short term retracement low and there's been nothing to change that view so far today, though this remains a big news close to the week with the British general election today. It seems unlikely that Britain's halfwitted opposition leader will be elected, but if there's a big surprise at the polls then the prospect of having an avid fan of the economic policies of Castro and Chavez heading a major western economy could obviously be a significant market mover tomorrow. ES Jun 60min chart:

NQ has been weak today and the possible double top there is looking more dangerous than before the open. I have serious reservations about seeing much more upside on NQ as of our Big Five tech stocks only AMZN looks as though it might have more that minimal room to the upside without major resistance breaks. AAPL, FB, TSLA & NFLX all look done or very close to being done. NQ Jun 60min chart:

TF as delivered the 1416 retest that I was looking at this morning and may well be on the way back to retest the ATH at 1425. Good reason to think TF makes that ATH retest though not much reason currently to think it goes much higher. TF Jun 60min chart:

NDX/NQ and RUT/TF are both looking as though they could fail hard in the very near future, which raises doubts in my mind about the options that I've been outlining for SPX today. What I would say though is that in the absence of a break of SPX channel support, reaching at least the lowest of those trendline options is just a matter of time, and the two retracements on SPX over the last two weeks both bottomed at perfect tests of the 50 hour MA (currently 2427/8), which is what I would expect to see in a strong ongoing move up. Until the bears can at least break under that there is nothing much to see on the short side here.

Stan and I did our monthly free public Chart Chat webinar at theartofchart.net on Sunday afternoon, and if you'd like to see the recording that is posted on our June Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 178% (to May 17th) over the last seven months, looking 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.

One Way Days

Apologies for the intermittent update schedule this week. I haven't been feeling that great and I suspect a couple of really good nights of sleep over the weekend are a high priority. Posting schedule will be back to normal next week.

I mentioned on Tuesday that yesterday and today were the cycle trend days this week. These sometimes deliver full trend days, but the other kind of day they can deliver is a day where one side dominates the day, but not to the full extent of a trend day. These days tend to make an AM high or low and then just inch in the chosen direction all day without any real retracements. Yesterday was such a day, and today so far as well.

That was unfortunate for my double resistance on NDX which was tested this morning and held for a while before NDX inched through it. That opens the test of the double trendline resistance in the 5900 area that I was talking about on Wednesday, and at the time of writing I'm wondering if NDX might test that today. NDX 60min chart:

ES hasn't done much more than retest the overnight highs in RTH today, but on the bigger picture the next serious trendline resistance that I have here on SPX is main rising wedge resistance currently in the 2485 area. That isn't a target here, but it would be a strong resistance level if tested. SPX daily chart:

The ES and NQ futures charts below were done before the 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 is still testing the rising wedge resistance on this chart and, NQ permitting, that may hold. The possible 60min sell signal that I was looking at before the open fixed in the first hour of RTH. ES Jun 60min chart:

 The possible 60min sell signal that I was looking at before the open on NQ also fixed in the first hour of RTH. With strong trendline resistance holding then at the time that was a very nice opening setup for bears. Not so much after that resistance broke and this push up on NQ failed the sell signal. That was really impressively bullish. NQ Jun 60min chart:

The 60min sell signal also fixed on TF in the first hour of trading today and that hasn't failed and is trying to reconfirm on the higher high in RTH. The sustained trade over 1400 however is very much making the full ATH retest at 1425 a likely target next week. That probably wouldn't kill that 60min sell signal if seen. TF Jun 60min chart:

We may not see any significant retracement on indices so if the bears have anything to say here, the chances are that waits until next week. I'm heading out to dinner with the kids & will be back to watch the close. Stan and I are doing our monthly free public Chart Chat webinar at theartofchart.net on Sunday afternoon at 4pm EDT, and if you'd like to attend then you can register for that on our June Free Webinars page. Be there or be less well informed! You can sign up for that here. Everyone have a great weekend. :-)