Dueling Technicals

Tuesday I tweeted this 15-minute chart just prior to the blue-up arrows.

The “hope” was that a new near the upper blue channel line but the red warning line won out.

Note where the SPX dropped to on Wednesday morning.

When MSFT reversed to the topside yesterday, the entire market followed.

The SPX ran up from a low of 3949 to 4019, closing just above the key 4013 region.

4013 is 360 degrees up from the December low so today we will see if we get genuine follow-through above 4013 on a closing basis:

Monday closed at 4019.

Tuesday closed at 4017.

Wednesday at 4016.

So the market knows this 4013 Square-out.

The rising red trend line should act as resistance—now just over 4020.

However, the SPX closed above Phil D Gap from Wednesday’s open with the push through the morning down gap triggering a Jump the Creek buy signal…in the short term.

So we have dueling technical:

On the bull side, the Jump the Creek buy, and on the bear side the 4013 region and the backtest of the rising red trend line.

Follow thru above the red trend line opens the door to 4040 which ties to a projection from a chart shown yesterday.

As you can see the 4040 region completes a Double Head and Double Shoulders pattern.

However, breakage above the right shoulder (4040ish) triggers a Blade Runner buy signal…ie, a broken or failed Head & Shoulders.

Fast moves come from failed patterns.

Consequently reclaiming 4040 opens the door to a 4141.

Why?

This is 540 degrees up from the December low.

We know that 540 degrees is a true square…a cube.

This is because a true square, a 3-dimensional square has 6 sides with six 90-degree angles.

90 X 6 = 540 degrees.

Nothing has changed in the big-picture Bull Trap scenario.

The big “Breakout” from The Bear Line is in progress.

My interpretation is that intermediate Wave 1 down ended in October and the Bear is carving out a large A B C corrective rally.

The above chart allows for the C Wave to carry higher.

If the SPX can successfully clear and sustain this 4013-4020 level it opens the door to 4141.

Above 4141 we can test the August highs at 4325 region.

The takeaway is if the SPX carves out a fractal of the Rising Wedge from 2020-2022, the expectation is a dramatic Wave 3 decline.

We’ll look at what those projections should be in tomorrow’s report