Wednesday March 23, 2016
Key Developments :
- Market Acquires a H&S top target and consolidates.
- Triggers 2nd H&S top pattern into the close, needs follow through tomorrow.
- Trend broken, but needs to make a lower swing low to take far more bearish posture.
If you want to keep track of bearish developments they are as follows
1) H&S target from yesterday’s action acquired target at 2039.40
2) Today’s attempt to trigger and form an inverse H&S higher, failed, forming another bearish H&S below that neckline. (see chart below)
3) A larger H&S formation has formed and triggered into the close. That pattern needs to see follow through tomorrow.
The bulls can say, we have not made a major swing low yet. This is true.
The current pattern I am watching is the larger H&S targeting 2024.54. Let’s see if that can occur or if they gap and go higher tomorrow. Now despite the potential of a 2nd bearish H&S pattern triggering and completing, the bears would still have work to do, as this would still be a higher low on a larger 30 minute time frame. To see what I mean, let’s scroll down and look at the next set of charts.
You can see that yes SPX Broke Trend, but we have been here before. See yellow line on the chart to the right.
Not saying this time won’t be different, just be aware that breaking trend and seeing prior swing lows taken out, is far more bearish than just breaking trend.
At the moment is still a higher low and even at 2024 it will be. We would need to see 2024 acquired and the 2000 area taken out. That would likely put us in a far more bearish posture.
That being said, I went out with a small short, do to the close below that neckline. My expectation is this will see follow through.
Here are some other things I am watching out for if this market is going to head lower.
1) VXX is still in it’s downtrend below the recent uptrend. Breaking above both would be a bearish development.
2) Yen Has Held Up Well during this US Rally. But is still consolidating. Would like to see this break higher to help confirm larger bearish thesis.
3) Russell rejected at the neckline. The H&S target is 861.26
1296 – 1078.63 = 217.37
1078.63 – 217.37 = 861.26
217.37/1078.63 = 20.15%
4) NASDAQ Looks like it’s toast.
The Bottom Line:
We are seeing some signs that the end may be near, but not enough to be all in bearish yet. We definitely want to be raising stops on any longs to protect gains and watch the price action to continue to develop.
We saw a H&S complete today and another trigger into the close. Follow through and completion tomorrow will likely give us more of a clue. We need to see further strength in the VXX to be trading bearish. This may just bee a garden variety pull back and nothing more. Keep an eye on all of the above for further confirmation.