CurtisM

ES and thus $SPX getting ready for a decline?

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Notice on the chart that each time in the recent past when the CCI has failed to make a new high along with the ES, that within a few days we'll get the start of a decline of one degree or another. Also note that an important precursor to such a decline is an RSI above 70. So as of Friday's close, we have all the ingredients in place that have preceded declines, but that doesn't mean we'll get a decline, though it certainly does suggest that we should be watching for such an event.

Also note that the ADX has climbed to 32. Normally, we would like to see the ADX climb to and above 35 and then watch for it to begin to roll over to indicate end of trend. But it's not a perfect world and the markets have rolled over with ADX readings much lower than current levels.

IMHO, the ADX at 32 is a concern, but the negative divergence in the CCI and the RSI recently above 70 are red flags and while history need not repeat there is a high probability that it will.

So what should you look for to try to determine if we're going to get more than a one-two day dip? I think the key is in the 60min chart. I put one up of SPY             on Friday showing that SPY             , and thus the ES & $SPX             , had closed above key EMA's. What I'll be watching for early next week is for SPY             to stay above the 13/34 EMA's. Should SPY             fail to stay above what I consider to be key EMA's and should the 13EMA cross decisively down through the 34EMA then I'll be watching for the ES and $SPX             to pull back at least 40-60pts before the decline slows and ends.

All IMHO, and I could be totally wrong.

GL
profitmaker999
3 years ago
I totally agree your idea. Excellent Job!
I think that it will retest the ex-high point in 60 min MA chart between next Monday and Tuesday. If ES can not hold above 1760, we will see below 1740 end of next week. However, if the ES goes above 1766, it might be up another 20 points. The GDP and job data of October will be released on next Thursday and Friday. Let see what happened next week.
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