$SPX – 911

It was an interesting 2 days, and not just because yesterday was my 25th B-Day.  I was treated with a nice decline with good volume, but only modest breadth.  Today there was some morning followthrough, but the afternoon faded back with it’s standard rally.

On to the charts… The $SPX has been chilling around 911 for the past few months, and we can add two more hourly closes to that support line, and now we remain below it.  What is GREAT to me (beside the $VIX, I’ll get to that) is the MACD.  Standard settings show a NEGATIVE MACD histogram value at the last high (either the spike, or the lower high).  That is a sign that bullish momentum is dying off.

Here is the 2 hour line chart of the $NDX.  Notice that all of this action has done nothing more than retested the previously broken trendline.  Granted, it is at higher levels, but the rally has yet to regain the explosive upside momentum of the early stages.  1244 is acting like 911 on the $SPX, but notice the higher beta $NDX is above this line.  This ($NDX strength) is to be expected in the beginning phases of a bear decline, and we will likely see a deep retracement in this index.

On the hourly, it is also sporting the similarly massive MACD divergence, as well as the negative delta on the histogram.  I couldn’t get a capture because prophet wouldn’t hold the value once the cursor left the “active” part of the screen…  Oh, well, I assume you get the picture.

What is more intriguing however, is the double sided gap.  There is a bullish gap (likely an exhaustion gap) open between 1262.52 and 1265.54.  On the other hand, the bearish move yesterday gapped below this gap (only strengthening the importance of this level), creating a gap that is still open to 1274.49, hence the speculative deep retracement.

At this point it is possible that we would get another high, more likely in the $NDX, but we will take that as it comes.

On to the $VIX.  When I finally got my ToS account fixed last year, I hadn’t copied over my $VIX chart from that prophet set-up, but it was exciting doing it earlier this week.  Aside from being below 40, which in current market conditions was perceived as a buy signal to me, the $VIX bounce right from previous spike resistances.

What this means to me is that if we were gonna break it, it would have been done there.  Notice the previous spike were to the upside, bearish reversals, and are a very precise moment (don’t we know it!!).  However, when complacency sets in, we see more of a rounded effect because we are taking longer to play out.  Unfortunately, I didn’t get my $VIX sell signal, but I think I can live without it.

Hopefully those of you who missed ICE are watching it set-up nicely for re-entry.  I was also tipped off by DMS of some nice looking short plays.  PCP is a nice triangle, stretched to the breaking point.  Yes, it has throw-over, so you non-Elliotticians may be a little confused.  If that is the case, accept that it is also a BB reversal.

COL is another representative, also stretched to the 2.0BB point of breaking.  As soon as that channel goes, it will be a nice short.

There are a few more that I am watching, but at the moment, I am waiting to make sure, beyond all of my doubts, that we are going lower.  When I know, or even am more sure, I will tip my hand.  Until then, make sure you know what you are holding.

That is it for tonight.  I am moving the short term trend to up-down, expecting topping tomorrow or Monday.  Medium trend will be the same up-down, leaning on the evidence that this sideways wave 4 chop is finally complete (or at least VERY near so).  Long term trend can remain down, unless we make a new high, IMO, until we are making new lows.

Skål!