Slope Of Hope with Tim Knight

Nice Inverted H&S Pattern

Rolling Over (by Springheel Jack)

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:

Topping is a Process (by Springheel Jack)

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:

Topping Out (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:

An Ongoing Balloon Ride

Weather balloons may reach stratospheric altitudes of 40 km; well-over double the standard altitude of most commercial jets.  Diminishing pressures at these altitudes cause the balloon to expand to such a degree (typically by a 100:1 factor) that it disintegrates- leaving the remains to fall back to earth.

For those of you who can recall middle/primary school science class, the Earth has five principle layers in the atmosphere.  The two closest to the ground are the troposphere (up to 20km) and stratosphere (20-50km).  Most of the phenomena we associate with day-to-day weather occur in the troposphere, including clouds; which stop at the tropopause- the border between the troposphere and stratosphere.

Since the October breakout, and subsequent retest, the SPX has remained well-above the clouds and the 400day MAs since November.

The question is – has price broken the tropopause?  Or is there more room overhead as, much like the troposphere, it is variable depending on latitude (which in this metaphor is a bull/bear market)?

Just eyeballing the SPX altitude since 2007, we have had 3 instances of a significant post-altitude drop (purple boxes) and 4 instances [or 2 long ones…] with only minor pullbacks (orange).  Notice the rising Senkou parallels such a price rise, and is doing so again today:

I don’t think anyone questions if this debt-filled balloon will disintegrate, but when.  Given that we’re probably approaching the stratosphere- I closed all longs today.  I would be more comfortable entering long again on a small pullback, but would hesitate to short until the full cloud is breached.

 

 “One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley.”

Greek Fires

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:

 

Apple at $1000/share? Oh, at LEAST!

Most of you have probably already seen the bullgasm happening over at Barron's. Here's their cover for the week:

Inflection Point (by Springheel Jack)

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:

One Sloper's Perspective on the Euro

Some Divergence Here (by Springheel Jack)

Obviously calling tops has been a hopeless task during this big bull move, and on the bigger picture I'm not seeing much to suggest that we might see a really big reversal here. We don't have anything in the way of large bear patterns here really, on equities anyway, and the lack of decent big support trendlines on the major indices makes it particularly hard to tell when a big reversal might happen. There is also currently very little in the way of topping patterns, and we are between big resistance levels on SPX.

That said, though it might be hard to point to a recent example, nothing goes up in a straight line, and even in a big bull move you will see some substantial dips. It might be another mirage of course but we are once again in an area where we might  see such a dip. Let's consider the evidence.

I posted the Transports index chart yesterday and observed that the rising support trendline from the October low was being tested, and that a break below it would be a sign of weakness. Well it has broken, and that is most definitely a sign of weakness: