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Monday, 23 May 2016

An Inflection Area

Decent rally on Friday that has failed so far either to make a higher high or to break over the 50 hour MA on SPX, so unless that changes I'd expect the rally to be reversed in the near future, and that may well happen. There is a possible alternate scenario here where SPX might be forming the H&S on a larger and flatter H&S pattern, and if so the ideal high would be a bit higher in the 2075 area. That would be very close to the 61.8% fib retracement of the decline from the highs so far and is obviously still potentially in play. Stan's bull/bear line is the 2039 ES area (approx 2043/4 SPX) so I'll be watching that area for possible support this morning.

The short term pattern on SPX is a decent falling channel and channel resistance hasn't been tested yet. A lower high under Friday's high could deliver that this morning and we may well see that. SPX 60min chart:
This is last night's chart on ES but since then a possible double top setup has formed that would target the 2031 (~2035 SPX) area on a sustained break below 2043.5 (~2047.5 SPX). ES Jun 60min chart:
The early warning of Friday's rally was the open 60min buy signals remaining on ES, NQ and TF after Wednesday's rally. ES has made the near miss target and NQ and TF both made the full target, but after a marginal higher high overnight a 60min sell signal has fixed there. TF Jun 60min chart:
The ES weekly pivot this week is at 2047, so about 2051 SPX. If bulls can hold that as support then this rally may be heading higher. A beak below opens a possible test of Stan's bull/bear line at 2039 ES (~2043 SPX), and a conviction break below there should mean that the rally from Thursday's low is retraced in short order, most likely in a decent leg down.

Friday, 20 May 2016

Support and Resistance on Opex Friday

Nice call from Stan on his Wednesday night video when he gave 2024 ES as the support to watch on ES yesterday and, if support was found there, then a likely rally to either the 2041/2 area or a retest of the weekly pivot in the 2053.8 area. I was hoping that ES would just trend down through that support but it was not to be, and ES is currently testing the ES weekly pivot area.

On SPX yesterday was the second day of a possible lower band ride. If that is to continue then the overnight rally needs to be reversed and the daily lower band, currently at 2033 SPX, need to be hit at some point today. Support is there and at the 200dma at 2011. Resistance is at the 5dma at 2050, the 50 hour MA at 2056, the 50dma at 2060 and the daily middle band at 2065. SPX daily chart:
Is there a bullish scenario here? Of course, the market can always go the other way and, if we were to see a break back up over the daily middle band at any point that was not reversed the next day then, the upside would open up. That doesn't seem particularly likely here but I would note that I have possible scenarios on both ES and TF here where the current H&S patterns might be evolving into larger H&S patterns with more horizontal necklines, and if this AM high this morning doesn't die then that might well be in play here. ES Jun 60min chart:
TF Jun 60min chart:
As I was saying yesterday morning, one of yesterday or today was likely to be a trend day and obviously that didn't happen yesterday. Main resistance on ES here is the weekly pivot at 2053.8 and if bulls can break that and convert it to support then we could trend up today. If we see a strong rejection at this test then equally SPX & ES may well trend down for the remainder of the day.

Everyone have a great weekend :-)