Thursday, February 23, 2017

We Need A Breather In The Market

Might Retrace A Bit Here

By -



The channel resistance break at the open yesterday was a significant break, and there’s no short term reason to think that we are making a sizeable turn here. There is quite a lot of short term negative divergence here though and that might deliver a modest retracement. Double trendline support is currently in the 2356/7 area and if SPX can break below there is a possible gap fill target at 2351.16 or we could see another test of the current price floor in the 2340 area, a strong match with the ES weekly pivot at 2337.75. SPX 60min chart:
170222 SPX 60min
If SPX is still on a daily upper band ride then the upper band is currently at 2370 and we should see at least a close test of that today. That’s a decent match with short term rising channel resistance on SPX and one of the possible longer term resistance trendlines that I drew in on the hourly chart. SPX daily chart:
170222 SPX Daily
Looking at ES there is still an open 60min sell signal on there from last night though I was doubtful about the double top setup when I did the chart this morning, and the sideways chop so far today means that I’m disregarding 2347 as a target. That doesn’t mean ES can’t retrace some more though and the short term support trendline break overnight was a strong support trendline break. At the time of writing this action looks like some kind of bull flag forming and I like Stan’s 2351 target if we are to see any more weakness. ES Mar 60min (pre-market) chart:
170222 AM ES Mar 60min
At the time I did this chart this morning I noted that NQ had not broken the short term support trendline and it still hasn’t broken it. That’s currently at 2338 and without that break there is just the open 60min sell signal on the short side, which isn’t to be relied upon in an overall uptrend as strong as this. We may see a weekly pivot test if that support trendline breaks. In the absence of that break the short term trend is still up. NQ Mar 60min (pre-market) chart:
170222 AM NQ Mar 60min
TF broke short term support overnight and isn’t far from a test of the weekly pivot at 1396.30. We may see that test today. TF Mar 60min (pre-market) chart:
170222 AM TF Mar 60min
With the channel breaking up on SPX yesterday there’s no longer an obvious reason to see an imminent high here, though this uptrend is a strong terminal move that could top out at any time. Like a trend day though, while it lasts negative divergences and cycles don’t mean a lot and the only strong reference point here is the daily upper band ride. A failure over two consecutive days to test the daily upper band, now at 2370, ends the band ride and opens the middle band, currently at 2312/3, as a target. A confirmed daily close below the middle band likely ends the uptrend. In the short term the structure is strongly suggesting at least one more higher high, after a possible modest retracement here.


Stan and I are doing two free webinars this week at theartofchart.net an hour after the closes today and tomorrow. The first is the Big Five webinar today (rescheduled from last week) looking at AAPL, AMZN, FB, NFLX and TSLA. We’ve been doing some really nice work on these the last few months and these are all looking toppy here, so that should be interesting. The second tomorrow is a second webinar on ‘Technical Patterns You Can Profit From’ following on from the first one in January. As always the TA will be world-class and the subject matter will be interesting so if you’d like to see either of those you can register for one or both on this page here.