This one’s going to be quick and dirty.

Since I’ve already posted numerous monthly charts for both indexes here and on twitter, let’s not waste our breath: they’re bullish – and it will take a lot of damage to change that on the long-term time frames.

So let’s get to it:

Since breaking out of its symmetrical triangle pattern at the end of May, the Naz has entered an up channel pattern on decreasing volume, and with negative RSI and MACD divergences. It is also moving towards very strong gap resistance in the 1896 range from last October.

A break of the up channel (in either direction) is what I’m looking for. Until that happens, we’re obviously in a range.

The 30 minute shows more detail on the channel, and we can see the false breakout at the open on June 5^th. Today’s session tested the lower line of the channel and bounced back above the 5 DMA.

The SPX dailies are showing similar technical issues. We have another consolidation pattern after having broken above the descending triangle at the end of May, and like the Naz we have decreasing volume and RSI and MACD negative divergences. I’m not as concerned with the decreasing volume in this case because it’s normal in a consolidation pattern, but the divergences are bearish.

A closer look at the dailies also shows the real battle at the 200 day EMA, which the index has failed to close above in several recent sessions. The multiple ‘tails’ left above the 200 day EMA is another potentially bearish sign, as it simply shows intraday moves made above the average that subsequently failed by the close.

Finally, the SPX 30 min chart gives a clear look at the consolidation pattern (pennant) formed since the last breakout. Today’s session saw a false breakout above the pattern, then reversed to test the bottom trend line, finally bouncing into the close to regain the 5 day MA.

Very important to note is that the Naz did not have the same false breakout as the S&P this morning, which in hindsight seems like a tell. This market will likely not move significantly north without the Nasdaq leading the charge. It has been what got us here, and unless leadership comes from somewhere else very quickly, the Nas will likely be what continues to front-run the other indices.

In summary, the weeklies are still very bullish, but there are bearish warnings forming on the near-term charts. And the great battles on the dailies just below resistance is where the real action is.

A big move is likely coming. Watch the patterns on the intradays and dailies, but be cognizant of headfakes like this morning. I would expect the Naz to make the first move when the market finally decides on a direction.

So for now, I’m bullish – as I respect the weeklies – but I’m waving some caution flags and keeping close watch on the trend lines – particularly the Naz channel. Trade the tape, and the charts, not your bias.

Regards and Happy Trading

@theEquilibrium

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