I say similar, because the previous ATH attempt was messy whereas this is just a clean ramping up.
These were exactly the target points as I saw them on the 4th of August.
These are now just Classic Machine Pattern Recognition Trading with little Human Intervention. The 6th of August, will again be an attempt to target the Zone of Resistance between 2823 and 2803.
2800 is an important target focus, as that was the clear line of resistance all throughout 2018, especially the 3 attempts that were made to breach it on the 16th of October, 7th of November and 3rd of December 2018; after which the SPX crashed to the 24th of December 2018 low of 2351.
The SPX will attempt to break 2803 and if and when it does, it will clearly bring the 3rd of June 2019 low of 2729 right into the next line-of-sight.
Looking at the Big Picture, it is important to realise that the UpWard sloping TrendLine from the lows of 2009 has been breached. This is a very significant development, as it indicates that the massive 10 year BullRun has been broken. The HYG has retracted and seems to be indicating a top in US Equities. US Bond Yield Curve Pairs are nearly all at zero, Germany and Switzerland have Inverted Yield Curves and the US Dollar or DXY is starting to weaken. All signs that the 2009 BullRun is coming to a close.
It made 2 serious but unsuccessful attempts to break this Resistance in a sort of mini Double Top. SPX opened at 2861 with a gapup of 17pts.
This was expected as the previous huge drop on Monday, (5th August), was the largest loss so far this year and the RSI Indicators were heavily oversold. It required this slight bounce on the 6th in order to re-adjust the technical numbers so as to be able to proceed further with the sell-off in an orderly fashion, without creating a panic, which the CTAs could then intensify into a WaterFall.
Looking ahead to the Wednesday 7th August New York Cash Open, I see the SPX making concerted efforts to target and break 2803 with High Volume and Momentum.
It must be remembered that the SPX500 or SPX Futures reached 2773 on the overnight session of the 6th before the Cash Open for Tuesday. This means nothing until it is done during the actual trading session, but it does indicate that the SPX will target 2803 and, if the momentum is strong, the SPX will hit 2773 and perhaps bounce off and be held there till the Wednesday (7th August) Cash Close.
This is a Bear Market that is in the initial stages of its inception and being a Bull here would be fighting a strong Bear Trend that is currently taking shape.
The Sell Volumes are picking up to Dec18 levels.
VIX has been uncoiled and finds 20 as a Base to build on, whereas prior to this time, 9 was the average daily VIX reading.
The SPX hs dropped from ATH at 3025 to currently 2880 in 5 days of trading. A loss of 145 or 4.8%.
The SPX on the 7th did everything in its power to reach 2900, but just could not do it; and in fact, eventually settled at 2884, which is just above the current critical support line of 2878. One thing to note is that the Lows of the past 3 days are getting lower, (this is more clearly evident on the DJI).
Prediction for the Cash Trading on the 8th New York Open Time? More ranging and more failed attempts to breach 2878 and stay convincingly above it.
The Put/Call Ratio is nearing Dec18 levels. The flow of money from the SPX to the US Bond Market is also approaching Dec18 levels. (One of the reasons for the dramatic rise in US Bond Prices and the consequent fierce drop in US Yields). The HYG curve indicates a top.
2803 still remains in focus, followed by 2778.
The SPX waited for help from London after their close and after 20 minutes, realising that none was forthcoming, resorted to holding up the SPX above 2900 by manipulating the buy orders for AAPL. The suppression of VIX also seemed to indicate that sell orders were either held back in a queue or were completely dismissed. VIX is a determinant of the frequency of buys and sells and when it goes down, it indicates that the SPX is calm but that was not the case on Friday as there was heavy buying of AAPL and AMZN. The problem here is that the SPX wants to sell off but is being held back. Once selling pressure fires in from other Stocks then VIX will correspondingly explode as has been evident in the recent past couple of weeks.
This was a very weak intervention to avoid the SPX from breaking through below 2900 and the subsequent TrendLine.
The intervention was very obvious, as USDCHF and USDJPY both spiked at the same exact time as AAPL began to trade just above the gap fill open at around 201. (200 for AAPL is an important price line, as anything below that will open the door to 185 and below for the Company).
The US10Y yield began to lower drastically, indicating that real money is leaving the US Equity Market and heading towards the very safe US Bond Market. However as soon as 2900 was hit that flow stopped. I still remain inclined to believe that once the SPX does sell-off that US yields will fall as Bond Prices increase.
The upward max value that the SPX could achieve all day was 2935, (which I feel is the current ATH as we look ahead to next week, starting on the 12th of August).
One of the indications that this was an intervention, and a weak one at that, is that the breadth of the market on the 9th was shallow. It was just AAPL and AMZN which were being traded in order to prop the SPX above 2900. (AAPL and AMZN are both major components of the SPX and manipulating their price in times of stress can hold up the SPX above critical support lines).
Will this last? I feel that the answer to that has to be unfortunately, no. The SPX will test 2803 and will also test 2778. There is also an interesting situation developing in the SPX and that is, the signs of an emerging Head and Shoulders Pattern, with the Right Shoulder now seemingly being built. If that is the case, then it is a classic case of the NeckLine eventually breaking.
All this and more will take time to play out and the next 4 weeks till the September FOMC meeting is still the timeframe within which a break down to the June19 and Dec18 lows remains firmly within view.
The final point to note is the rapid selloff just in the last hour of trading which saw the SPX end at 2918, which is the top of the 30 gap between 2918 and 2898.
We are still nearly a 100 points below ATH and this week saw a unique DragonFly Doji on the Weekly Chart, (a huge one), one that is rarely seen and has been seen only twice going back to 2009. (Doji Patterns indicate that the Index is trying hard to rise but is unable to, usually an early indication of a Trend Reversal).
Looking at the SPX, it seems to be following the near same pattern as after the previous Double-Top on the 3rd of October 2018.
On the 8th and the 9th, it found resistance at 2940, which is the 3rd October 18 Top.
10 days after the 3rd of October 2018 ATH attempt, it completed the initial drop and subsequent retraction. That was at 2814. We are now at the 9th day of trading after the latest ATH attempt at 3020 on the of 29th of July 2019.
The SPX has filled the gap of the 5th of August and should have gone higher but the rally failed. I think that it will go down to the strong support at 2815 in the week head.
It is about 4 and half hours before the Cash Open on Tuesday. Looking back to yesterday, it panned out as I thought it would. The SPX made no effort to break upward resistance and just engaged in a slow and steady drop. One of the reasons for that was the dramatic fall in the US10Y yield, which fell nearly 7% in just one day and at one time reached a 52 year low. The 10Y yield is half of what it was when Trump took office and is at 2016 levels. The fall in the yield, and most notably, the rapidity of the fall, indicates fear in the Stock Markets and a rush of cash into the safe havens of the vast US Bond Market.
Looking at the early futures market, it seems that the SPX will again try and test down towards 2815/35 and that the prospect of attempting another ATH is slight. The upward momentum is gone and ranging, followed by meaningful downward moves maybe the norm now. 2778 remains strong support.
(I point you towards the huge and glaring Dragonfly Doji Candle on the SPX Weekly Chart from last week). Gold is spiking in value, almost in a parabolic fashion.
There are gaps that need to be re-filled down to 2822 and new gaps till about 2803. Important number to watch is 2873, which is the Jan18 high and also the point at which the SPX bounced off yesterday. Once it breaks below this then the 2835, 2822, 2815, 2803 come into focus.
Many Thanks For Reading and I Wish You All the Best, As Always.
The SPX is boxed into a range between 2940 and 2820. It is forming a downward sloping wedge pattern and unless it rallies hard, it will keep stalling and eventually drop out of the box.
In August, so far, we have had the largest 3 drop days for 2019; which are, a drop of 2.98% on the 5th, a drop of 2.93% on the 14th and 2.59% on the 23rd. The intervals are 9 days apart. The drop on the 23rd was for, a few seconds, the largest loss for the year at over a loss of 3+%.
All in all, it is not looking good. If the bulls cannot rally the SPX hard and true then it will just keep stalling and the longer it stalls the greater is the chance of a drop.
The US Yield Curves have dramatically inverted and the 2s10s keeps flipping in and out with it not being very long before it remains consistently inverted. The U30y yield is at its lowest ever point since its inception. The 10y yield is at 52 year lows. Time will tell but the direction is biased southwards but with the proviso that a tweet could pump up the jam on the SPX anytime.
Key date will be July 31st for the Fed. How the market reacts after the Fed into August will determine the fate of the near-term markets.
IMO we only squeeze higher if we see a 50bps cut which I can't see happening. I think a 25bps will keep it near-term steady as long as he remains extremely dovish for future cuts and outlines a likely next cut in September.
I don't see any major (>15%) correction until September or October. However I am still eyeing a Gold and BTC gearing up slowly tomorrow after the ECB talk and commencing after the Fed talk on August 1. I would not be surprised to top 1500 in Gold.
I also agree with you that Gold may have started a long-term bull run, due to dollar devaluation and also as a hedge against imminent recession. Thank You again, for your comments. Much Appreciated.