Trading the Line

12 February, 2017


A Leap of Faith


I've come back for you...
to remind you of something. Something you once knew...
That this world is not real.
To convince me to honor our arrangement.
To take a leap of faith, yes. Come back...
so we can be young men together again.
Come back with me...

Inception, 2010, Dir. Christopher Nolan

As I suspected over the last few days, the renewed strength of the Bull market and the recent behaviour of the T volume oscillator is suggesting that the series of recent shallow lows has formed the new 'Cluster T Structure' marked in blue. The positioning of this T structure is provisionally placed at 19 January - an approximate centre of the last 4 lows in the oscillator, but may need adjustment in due course, as the market reveals its intentions further.

(Because there isn't a defined price low and/or oscillator low, the position of the T structure is uncertain. Alternative placements would be a centre at 30-31 January with a similar result, or something inbetween 19 and 31 January.)

This Cluster T structure provides for a series of highs in mid February in line with the original Large 'Trump' T structure, but is also projecting into mid and late March in line with the upcoming Echo and Pulse cycle highs marked in pink and green.

Of course, as you can see, we find ourselves at an important rising line projected from previous highs, and so it wouldn't be surprising to see some consolidation as this level similar to recent passages. However, the additional strength I am observing here seems to be suggesting a break upwards through this line and targets 2350-2400, perhaps quickly. But with a strong resistance line at 2380 in late March.

Chart of S&P 500 for 11 February 2017

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OBSERVATIONS

OSC (5,35) oscillator: POSITIVE - and looking strong
T Volume oscillator: POSITIVE - +13 - and breaking cash build up line and confirming a T.
Further strength in the oscillator above the recent peak of 16 will add conviction to this T.

IMPORTANT LEVELS

S/T BUY SIGNAL above 2289 on 3 Feb, confirmed at 2292
COVER if closing below 2297
Very short term bearish below 2296
S/T SELL SIGNAL with sustained move below 2280

Potential resistance at 2316-18 - rising Gann resistance line from previous highs
Possible target long term resistance line at 2330-37
Upper extreme at about 2350-60
Possible target long term rising angle from Dec 14 at 2360 ish

Potential support at 2290 - descending Gann resistance line from recent high now potential support
Potential support / resistance at X and XX emas - 2296-98 - IMPORTANT line in the sand
IMPORTANT Rising support line at 2292
Potential rising channel support at 2253-54 - rising gann support line (red) from August high
Potential support at the lower bollinger at 2257
Potential support under the previous recent low at 2233-5
Potential support at 2254 from 55 ema

SHORT & LONG TERM REASON TO BE BULLISH

Long term target 2350 - 2400.
New Blue bars on the chart indicating potential continuation of bullish trend
Powerful looking T structure with endgame strength into final arms
(subsequent peaks will depend upon how deep the market pulls back after each arm)
T volume oscillator turns positive
New Cluster T structure emerging from series of shallow lows indicating potential strength into March
Market made a climax low and a 4 day thrust upwards - a major long-term BUY Signal
Still potential for move up into the next arms of T structure - 17, 27 February (+2 days possible shadow)
There is a long cash-build up going back to the oscillator peak on July 12 (+80) projecting as far as late February
There is a small cash-build up going back to the oscillator peaks on December 8 and November 15 and 22, and projecting into mid February, and March
Market corrected in time but not price, and squeezing upwards
OSC oscillator turns positive and looks strong
SKEW below 135

SHORT TERM REASON TO BE BEARISH

T structure nearing potential endgame
No major pullback for more than 50 days
Next arms of Large T projected for 8 February and the 17 February (+1 or 2 days possible)
At some point the market will sour on Trump, perhaps now or in later February or March, most probably coinciding with one of the end arms of the current major T structure and/or cluster T structure.
Vix at low levels considering potential for future volatility, watch out below 10.40
Short term RSI at 97 approaching overbought levels associated with peaks
Long term RSI at 69 approaching a level associated with major tops (70+)
Be prepared for an unexpected and really volatile move to occur sometime in the future.

Keep an open mind, Hedge your risk and have a Great day.


* Please note that this is premium material and not for re-distribution to other traders *

This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for entertainment purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

© Steve Rushton | tradingtheline.com