In the screen capture for the S&P 500 Futures from Stops and Targets above I have highlighted the current Multitrend Rating (Bull 1) explanation, with particular emphasis on the intermediate range envelope top, which is currently equal to the intermediate stop/reverse line since the intermediate timeframe has been trending bearish. That value is currently at 2652.75, but it will decline at today’s close, likely to the daily bar high (since today’s high will be the highest high of the past four trading weeks). As I type the daily bar high is at 2624.
click image to enlarge
In my last post I pointed out the upcoming test of intermediate resistance–and we are now here!
The intermediate timeframe signals have been very important in the major correction that started in September. To clear away some clutter and to make that point more obvious I have removed all of the short-term and long-term signals from the second screen capture above, which is from my daily bar/range chart.
I have labeled in blue text some of the significant waypoints:
- Top Spotter signal at 2951 on 21-Sep-18.
- The next event was the first sell signal at 2874 on 10-Oct, when price broke out below the intermediate range envelope bottom.
- The intermediate timeframe started trending at 2873 on 8-Nov, when the range top descended below the first sell signal.
- An intermediate trendline break at 2618.25 on 14-Dec signaled the start of the next leg down.
- The Bottom Spotter at 2316.75 on 26-Dec coincided with a test of very long term trendline support.
- The first counter-trend buy signal came at 2434.50, also on 26-Dec.
That brings us to TODAY, where we have a simultaneous test of the key Weekly Bar Paradigm line at 2607 and a perfect back-kiss (so far) at 2624 of the extended intermediate trendline support that was broken on 14-Dec. A back-kiss occurs when price touches the underside of a previously broken trendline. That is where the pros often run price on a bounce to guarantee that all bears who shorted the trendline break are in a negative profit position (to run bearish buy-to-cover stops and create guaranteed buyers).
This is the area where we can start to get a feel for either the start of a pullback leg from a touch of intermediate resistance (once bearish stops are run)–or alternatively, a major upside range envelope breakout that will flip the intermediate stop/reverse line bullish. Trending markets officially reverse when the range envelope is broken.
We have seen lower highs in the intermediate range envelope since the original Top Spotter alert way back on 21-sep-18. Today (at the close) will be the first time that the intermediate range envelope top rail has been touched since the top.
…so HEAD’s UP!