Brave New World?

I updated the charts for NDX, NYA, DJIA, RUT and COMP in the past few days.  The picture is mixed at best, with RUT, for instance, looking quite overripe, and COMP looking like it’s seriously considering 3343.  The DJI is happy as a lark making new highs, while NDX is coming up on all kinds of resistance at 2834.

I suspect they’re all taking their cues from SPX right now.  And, SPX is still intent on joining the new all-time high club at 1576.10.  I see no reason why it can’t reach it, though we went to cash over the 3-day weekend just in case.

The world didn’t come to an end over the weekend, so I’ll stay cautiously long with tight stops during the trading day and hope SPX doesn’t close at 1576.08.

UPDATE:  10:03 AM

The ISM’s Mfg PMI just came out and it’s a stinker.  SPX just backtested the yellow TL and quickly caught itself.

Employment growing faster, while new orders and production are off?  No problem there.

The small red Crab Pattern targeting 1576.46 is very much intact, so I see no reason to panic now.  Eye on the prize, eye on the prize…

UPDATE:  10:40 AM

Pretty sure this is an effort to shake out the longs, but a drop through 1564 means 1555-1560 is in the cards, so I’m switching sides here.  Charts in a few…

UPDATE:  10:50 AM

Here’s the bulls’ short-term problem…though it’s not insurmountable.  Note the loss of momentum (white channel) on the 30-min RSI…

…and 60-min RSI…

The daily RSI also lost the purple .75 line and the bottom of the little red channel.  But, the .25 of the yellow channel dating back to the Nov bottom is right here around 1560 and could provide a floor.  If not, the white  midline is just below.

We obviously have negative divergence on the daily chart, but that’s been going on since Jan 25.  It’s hard to ignore, however, the potential for the purple channel to take over from the yellow, and that could mean increased odds for downside here to the intersecting white/purple midlines at 55ish.

From a price standpoint, SPX could find support at the white 1.618 of 1559.32, but the stronger support is at the .25 purple channel line at 1555-1556 — also the vicinity of the 1.618 extensions of the much larger Crab Patterns at 1553.39 and 1555.57.

Bottom line, while the chop that began several weeks ago continues, SPX is growing technically stronger with these tiny little pullbacks that reset RSI.  It doesn’t mean we will top 1576, but it continues the theme of TPTB being very, very careful to lay all the necessary groundwork.

The alternative, a sloppy, enthusiastic ramp like last September’s 2-day post QE3 rally to 1474, is less sustainable to be sure.

UPDATE:  3:10 PM

SPX got as low as the upper end of our target range from earlier, and has since melted back up to just below the 1564 trigger point.

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