Bull Flag And Retest

I’m hoping all of you saw the bull flag channel on SPX that I posted on my twitter feed on Wednesday morning. Obviously that has played out and delivered a new high on SPX on Friday. So what now?

Well this is another inflection point of course, I’m expecting a reversal into a larger retracement to start soon but SPX could break up higher directly. The retracement low last week established a very decent looking rising channel from the last significant low at 3855, and there is plenty of room to the upside in that channel.

On the downside a break below that channel support, currently in the 4145 area, would be a good indication that the larger retracement I am thinking is likely here is in progress.

A possible double top formed at the retest of the all time high last week, and on a sustained break below last week’s low at 4118 the double top target would be in the 4043 area.

SPX 15min chart:

On the hourly chart the RSI 14 sell signal reached the possible near miss target and I’m disregarding that. I’d note that rising rising from the March low is now in the 3945 area, supported  by the weekly middle band now in the 3911 area below, and the broken highs in the 3950 and 3980 areas above. If we are going to see a larger retracement, then that zone is the backtest zone that I would expect to hold if the larger retracement is just a backtest of broken resistance.

SPX 60min 15Mo chart:

On the daily chart an RSI 5 sell signal fixed last week, and an RSI 14 sell signal started brewing at the high on Friday. There are a lot of these daily signals now fixed across multiple indices and leading stocks, notably NDX, AAPL, AMZN and GOOG, and the odds are good that these can deliver that backtest, and possibly more if some key supports break on the backtest.

SPX daily chart:

NDX is still retesting the February highs and there is a possible decent sized double top formed in the event that those key supports can be broken. If we see a retest of the current all time high that might set up smaller double top that might then play out if we see the backtest that I am expecting on SPX.

NDX daily chart:

I’m wrapped up in divorce stuff most of this week but I’ll try to get another post out on Friday.