Support the Wall Street Examiner! Choose your level of support to receive a free proprietary report as my thanks. Click the button below to see your options. Become a Patron!

Resistance

This is a syndicated repost courtesy of NorthmanTrader. To view original, click here. Reposted with permission.

One down day a bear market does not make, but I’ve been analyzing a lot of market structures lately and have been outlining some of them in context of larger counter rallies following initial larger market tops. The question being whether the rally we just saw from late December into early February is following a historical script consistent with a bearish counter rally.

Liquidity moves markets!

Follow the money. Find the profits! 

To this end I want do take note of precisely where today’s down day is coming from. Of course markets were short term overbought after a massive 400+ handle off the lows, but it’s often the context that matters and in this case it is noteworthy that the rejection today comes on the heels of $SPX hitting confluence resistance.

This morning I had an opportunity to discuss some of this with Brian Sullivan on CNBC, and I mentioned 3 specific time frames and 3 moving averages on these 3 time frames, specifically the daily 200MA, the weekly 50MA, and the monthly 15MA:

I noted that all of these MAs are occurring in the same price zone and I outlined the 2730-2760 area as the key resistance zone.

Lo and behold note now where $SPX is showing signs of weakness:

The daily 200MA:

The weekly 50MA:

The monthly 15MA:

I recently posed whether this rally was a bull trap and here’s the updated chart of everything:

Now let me be perfectly clear: It is way too early to tell, and for all I know today’s dip may just be another 1 day wonder, but we can observe that $SPX is reacting precisely in the areas it historically has shown to react in context of counter rallies.

And as I’ve outlined before, all this is taking place in context of a very steep and aggressive rally below the 200MA:

So watch the signals, and keep an eye on structures:

Sven Henrich

@NorthmanTrader

HAL: What is going to happen?
Dave: Something wonderful.
HAL: I’m afraid.
Dave: Don’t be. We’ll be together.

View image on Twitter

Sven Henrich

@NorthmanTrader

HAL: Just what do you think you’re doing, Dave?
HAL: Stop Dave. Stop Dave. I am afraid. I am afraid Dave. pic.twitter.com/hj0n3u7AD8

View image on Twitter
19 people are talking about this

Markets are a journey and finding edges makes the journey worthwhile 🙂

Related Readings:

All Hail Chairman POWSignal ChartsBull Trap


For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Try Lee Adler's Technical Trader risk free for 90 days! Follow the money. Find the profits!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.