I was saying yesterday morning that a pinocchio through trendline support was generally soon followed by a more definite break, and we then saw that hourly close below rising support from the December 19th low that I was looking for:
That was a very nice day for the bears yesterday until the rally in the last hour wiped out the day's losses. Overnight ES has broken to a new high and so far the broken resistance area at 1352-3 is now holding as support. Technically however, despite all the drama, nothing much has changed on the SPX chart apart from a double pinocchio of support from Dec 19th that is suggesting a bigger break downwards soon. Short term I have trendline resistance in the 1362 area, and support is now in the 1344-5 area. The 2011 high was at big resistance in the 1370.6 area and that isn't far away now:
Continue reading "Topping is a Process (by Springheel Jack)" »
Shortish posts all this week I think as I'm a bit distracted offline. On SPX we have nice clean trendlines now, and those trendlines are suggesting that upside is limited and a more significant retracement is close. I wouldn't go so far as to call this a rising wedge on SPX, or if I did I would take it from the 1333 high and next 1300 low, as the long move from 1202 to 1333 without touching either trendline, was too long in my view to qualify the overall setup as a rising wedge. Support is in the 1340 SPX area and resistance is in the 1360 SPX area, and on a break of the support trendline I would see the obvious target at the rising support trendline from the November low in the 1305 area. Support to watch on the way there is at the middle daily bollinger band (20 DMA) in the 1327 area:
There is hardly anything different about the experience we're going through right now than what we went thorugh late last June - - - the tear gas, the pledges that this austerity would solve everything, the declarations that everything was fixed - - it's all exactly the same.
But there's one thing that's going to be different. I'm not getting sucked into believing it. Last summer, I spent almost all my free time at Stanford Sierra Camp - - the time I should have been hiking, exploring, and enjoying myself - - - plopped in front of a laptop and sweating out the Greek vote drama. It was a complete and total waste of time. I was stupid to worry; I was stupid to think anything would get solved with another band-aid; and I was stupid to spend my time watcing politicians instead of enjoying life.
The Greek Parliament passed the austerity measures required for the Eurozone rescue yesterday night, and the spontaneous street celebrations in Athens are showing that, for the moment at least, the greek public seem to be solidly behind the deal, even if those celebrations seem a little over-exuberant by non-mediterranean standards. It's reassuring to see however that the greeks are united, as they undertake a program of austerity and reform which might well prove overambitious for a more weak and divided nation:
It may sound odd for someone like me, but I'm glad the Greek vote passed. If it had failed, someone would have come up with some dumb-ass plan to "save" everything and undo the vote. As it is now, the bulls got precisely what they wanted. The Greek people have been sold up the river. So all the good news that can be had is already out there. Lap it up. Because there's not a doubt in my mind that Greece is ultimatley doomed, and the Euro is going to be drowning in due time.
Below is the "everything is saved and everything's going to be great again!" rally.....
As I mentioned yesterday the negative divergences have been building over the last few days and it appears that at the time of writing, equities are likely to gap down heavily on reports that the Greek deal is falling apart. I'm surprised by the Greek news I have to say, I was expecting it to last at least a week or two after being finalised, though against that, the deal is so obviously against the best interests of Greece, and has so much resistance to it there, that perhaps this is not such a surprising development after all.
Quite a few interesting charts this morning and I'll lead with a chart showing the daily bollinger bands on SPX, NDX and RUT. You can see how these indices have been walking the upper bollinger band upwards during this amazingly strong move, and if we are to see a retracement here, which seems likely, the obvious targets are the middle bollinger band in the 1320-5 area on SPX, with some strong support in the 1333 area, and rising channel support (marked) on NDX and RUT:
