Another Rejection at Major Resistance

Daily SPX Rejection from Big Resistance and Bearish Momentum Shift

 I got daily momentum sells on all the U.S. majors this last week (except for the Dow Transports). The weeklies haven’t actually even generated buys since the Nov. lows, and as such obviously remain on weekly sells (except for the Dow Transports). It’s important to keep in mind that that little detail with regards to the weekly time frame. It is much more than anecdotal! It could be a major hint that the daily time frame rally is much more fragile under the surface than it looks in all its daily glory. It’s a possible swing failure on the daily RSI and a possible Stochastic swing failure on the weekly (with the weekly momentum indicators generally never even getting off the mat so-to-speak). It leaves us with a weekly shooting star in snapback fashion right at major resistance on the SPX (and the same on a few other indices as well) to complement the daily, now confirmed, shooting star/evening star reversal highlighted in the chart above! This is not something the bulls necessarily want to see, especially when taking into account where we are inside the current dominant IT cycle.

 IT Cyclical and S/R Study with a Little Extra for the Fib Fan Fans

The NDX got a death cross on the daily this last week, and while the same on the COMPQ is still pending, the weekly chart of the COMPQ gives us another dramatic example of the bearish aspects of current price action weakly snapping back to the former trend line (lower wedge) and major S/R (first mentioned here) which is currently acting as resistance that coincides with the middle Bollinger and, all this suggesting that, minimum, it is there, in the 3035-3040 region, where the top of the ST range is to be found (the best case scenario short term for the bulls in my opinion).

 A Very Bearish Looking COMPQ

I see this as being a very ominous looking short term TA picture for the U.S.  Has the US become the center of the world's event risk focus? I'd say the bulls had better show up early next week and put in a local bottom for the right shoulder of an inverted head and shoulder pattern spanning the last 8 weeks, or it's only going to get worse in a hurry. That's my thinking at this time anyway. What with the Bernanke Fed going on life support and everyone thinking the opposite . . .  

On the other hand, if price is unable to move lower given this very bearish setup, the potential does exist for a bear trap as a short term counter trend shakes out weak bulls along the way. Bears need to watch closely for confirmation.


Bonus sentiment data here: Where's The Money On The Sidelines? (Hint: All-In)