Pretty much everything I have written about in my last few posts on SPX delivered. The bull flag wedge from the high broke up. The IHS that then formed broke up and made target, and the bull flag made the target with a retest of the June high.
So what now? Well I was saying that I was expecting a retest of the high to form a topping pattern setting up a larger move down in a reversion to the mean move. The level I use as the mean is the 45dma and that is now at 4287. The last two such moves broke down through it and, if so, I would be wondering about a possible target at the main rising support trendline from last year’s low, currently in the 4090 area.
SPX daily 45dma chart:
NDX delivered too. The small H&S that broke down and then failed set up a target at a retest of the June high there, and that target was reached yesterday. That means that, as with SPX, there is currently a very nice looking double top setup on NDX and a possible daily RSI 14 sell signal brewing. This is a very attractive double top setup.
What I would add though on this chart is that there was a much larger H&S on NDX which also broke down last year, and has now also failed. That has set up a bigger picture target on NDX at a retest of the all time high, and, until demonstrated otherwise, I’m expecting to see that retest in the next few months, so if we see that retracement that I’m expecting to see here, I would be looking for a larger impulse up to that target afterwards.
NDX daily chart:
On the NDX 15min chart you can see the H&S that failed and delivered the high retest. In effect this setup acts as another kind of bull flag. You can also see that the move up from the late June low has formed both a decent looking double top setup , and a rising wedge that is suggesting that NDX is close to at minimum to a retracement here that retraces 50% or so of that rising wedge.
NDX 15min charts:
All the targets to the upside have been reached. SPX, ES, NDX & NQ all made their upside targets. RTY/IWM didn’t really have upside targets but retested their June highs anyway. INDU/YM also doesn’t have a clear target back at the high retest but pretty much also made that target yesterday on INDU, though YM still has a little further to go.
INDU 15min chart:
The high yesterday on SPX was at 4488.34, with the close just under the daily (2sd) upper band at 4475. The 3sd upper band closed yesterday at 4512.80 and that should be a bit higher today. I’m not expecting that to be hit, but if we see SPX go higher today then we should see HOD underneath it, and a retest of yesterday’s high in RTH will also set high quality hourly sell signals brewing.
SPX daily BBs chart:
So what now? Well everything has made the short term targets I gave, but the timing was unexpected. This week is historically one of the most bullish weeks of the year, and the two most bullish days are today at 76% green closes and tomorrow at 71% green closes. I was therefore thinking that the upside targets would be hit today or tomorrow rather than yesterday. That leaves us with a very bearish looking setup today on what is historically one of the most bullish days of the year. The fact remains though that the big winners yesterday were equity indices and bonds, and the biggest loser was USD, and this morning I am looking at possible hourly reversal signals brewing on all of them. My lean for the rest of this week is therefore cautiously bearish, against strong resistance at the SPX daily 3sd upper band now not far above. We’ll see.
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13th Jul 2023