Chicagostock Trading

Chicagostock Trading

SP500 January 2018 Mirrors January 2016

 

The SP500 started this year, zooming through last year's high and charging up to 2800.  This 2800 level is the 6 month volatility window in which 5 daily closes above established a bullish 6 month bias, forcing buyers to buy the breakout. The bias was established on January 24th, when the market completed its Cup/Handle target created on January 17th, after recovering its prior high of 280850 based off the January 16th low of 276925.  The market expanded this Cup/Handle up to 2846, seeing 2 days of consolidation, before expanding higher on Friday January 26th.  The breakout over the prior ATH of 2855 lured in new buyers, in which were caught when the market fell back under fell back under the January 24th low of 282550.  Over the last 2 days, buyers have fought to defend this level, seeing the market fall back to its Cup/Handle breakout of 2810 in which buyers defended, however were unable to overcome 2840.  Today the cash market opened lower, leaving longs trapped above and forcing sellers to chase lower, giving way to fall back under 2810 and target sell stops below the January 16th low of 276925 that began the move up.  By falling under 2800, buyers who bought the breakout above are now on the hook as the market falls back to test its 6 month pivot of 2751.  Buyers will be forced to defend this level, to prevent further damage, however as the Midcaps are showing, a move below the 6 month reversal window of 2717 and 5 daily closes below, will reverse the 6 month bullish bias into a reversal bias, giving way to expand the range of 211 (2667-2878), down toward 2456, which retraces the market back to test its breakout from September.  Rallies back to 2800-2810 now offers new resistance as supply is caught above, for buyers to overcome and sellers to defend.  Buyers will need to squeeze shorts through the February high of 2837 in order to get another shot at the high.  Failure to overcome 2800-2810, leaves longs vulnerable to see a shakeout under the 6 month volatility window of 2717.

Continue reading
599 Hits

Here Comes Santa Claus

Santa Claus came a week early to Wall Street with the SP500 breaking through 2665 on Friday.  As seen in the above chart, since the September low of 2485, the market expanded its rally into the November high of 2594 by 100% as it ran into 2665 earlier this month.  There was an initial break off the level that caused the market to fall into 2605 which was fueled by "fake news".  The market recovered off this low to make another run at 2665, before pulling into test 2620 as the November 29th low prior to seeing the break down to 2605.  This level held, trapping shorts below as buyers marched back to press against 2665.  The breakout seen this past Friday through 2665 has the market testing its 127.2% fib at 2694, with the 161.8% extension seen at 2732. Last week's 265175 low is now key for any downside shakeout/reversal.

 

Tags:
Continue reading
472 Hits

SP500's Trouble with 2665 and Thursday's Vol Windows Defined

On Thursday, the day after the FOMC statement, we review the intraday action in regards to Chicagostock's Volatility windows and pivots.  The highlighted blue box, is the cash market open, NYSE 930 AM.  After the open, the cash market had trouble overcoming the intraday pivots, seeing the range act as resistance.  This led the market to fall into the lower Vol window which was met with a defensive bounce.  The defensive bounce gave way for a retest of the open, giving sellers an area to defend and buyers major resistance to overcome.  For buyers that picked up the initial test of the lower Vol window, this provided a bounce to take some profits into.  Second or third attempt at the lower Vol window, increases the odds of seeing the level failing. After failing to overcome the opening range, the market drifted back toward the lower Vol window which was taken out. In order to establish a bearish intraday bias, a 5 minute hold below the lower Vol window needs to be seen.  Sometimes the market can establish a bias, and bounce back to the open to again force sellers to defend their intraday trend.  In this case, the second test of the lower Vol window saw the level taken out, establishing a bearish intraday bias.  Since there was already an early bounce off the lower Vol window, there was not another one and sellers expanded the market lower, forcing longs to liquidate into the close. 

 

Continue reading
324 Hits

2623 & 2665

Right before Thanksgiving, there was one technical pattern that was yet to be completed, the inverted head/shoulder projecting 2626 seen here. When the market made new month lows on November 15th and recovered, this created a bear trap with a minor inverted head/shoulder pattern that completed the next day at 2587. After squeezing off the low and completing the small inverted head/shoulder, two new patterns developed.  The pullback into retesting the November low gave buyers an opportunity to defend the low, in turn creating a right shoulder for a larger inverted head/shoulder pattern, targeting 2623.  Inside of this right shoulder, a minor cup/handle formed, projecting a breakout over the neckline of 258950 to test 2600.  After pushing through 2590, the market overcame its last high made on November 16th, aka the "neckline", giving way to expand the larger inverted h/s pattern from 2589 up to 2623. It took 5 trading days to get to this objective on November 28th.  After running into 2623 and completing the inverted head/shoulder technical pattern, this is where the market became sloppy.  Buyers were not done. Buyers rushed into the market on November 30th in anticipation of the tax bill passing the senate, pushing the market to make a high of 265850. The next day after this high, news came out alleging President Trump ordering Flynn to contact Russia as a candidate, not as the President elect. Nonetheless the market flushed down to a low of 2605, before recovering to settle the market at 2644 and await the tax vote into the weekend. Over the weekend the senate managed to pass the tax bill, which saw Sunday's futures gap 10 higher on the open at 2654.  The higher open lured in new buyers, run into the 2665 100% Fibonacci extension where the lid was met and resisted, dropping the market back to Friday's settle of 2644. 

Continue reading
296 Hits

Is This the Top?

Last week, we highlighted the inverted head/shoulder technical pattern that was created after the market made new lows for the month in November and caught new shorts on the hook.  This inverted head/shoulder pattern, gave room to expand the market above the neckline of 258950 up to 262350.  The target was met on November 28th, with the market hitting a high of 2627.  

 

 

Continue reading
601 Hits