The S&P Took Its High Overnight. Fake Break or Breakout? 1 Rule Decides.

Left the market unsupervised for a day. Came back braced for broken furniture.

Markets did very little while I enjoyed a day off at a friend’s 70th birthday party¹, prices are just sitting around the levels noted yesterday morning in the market briefing, and once again developed another inside day.

¹ 70 candles. More heat than the S&P managed all day.

So the inside bar story carries on from yesterday, crude is sitting on a level that matters and Bitcoin has made its mind up. Scroll down for the levels I’m watching.

Market Snapshot – VIX has cooled its jets.

VIX has cooled its jets, allowing those premiums to deflate further and cash out for many. Another sell off will allow that VIX trade to rearm itself again, wouldn’t that be nice.

• S&P 500 futures: 7,589.00, +0.45%

• Uncle Dow futures: 52,348, -0.05%

• NazQuack futures: 28,232.25, up over 1%

• Uncle Russ futures: 2,841.6, +0.32%

• Gold: 4,057.2, +0.41%

• Crude: 86.85, +0.47%

• VIX: 18.94, -2.62%

• Bitcoin: 73,560, -0.19%

SPX – The side that breaks first is often a false break.

Sticking with the SPX daily chart still and looking at the unfolding inside bar patterns, we can see the reference inside bar (1) and the drop, the fake break ‘n drop (2).

I went to a party. The S&P stayed in. Twice.

Now we have two inside bar patterns, again as per the comments from earlier in the week, and this is a continuation of yesterday’s inside bar comments. 3a is a new inside bar from yesterday to complete the fake break within 1 to 3 days. 3b is a new inside bar for today, which has had the high taken in the overnight trading on futures already.

The ??? on the chart is what might happen next. My usual expectation is for the side that breaks first to often be a false break before making a run to the other side of the inside bar. In this case, a false break of the high to run to the lows.

As with yesterday, a clear move above the highs without retreating back inside the inside bar and it’s a breakout move.

We can’t discount the possibility of that happening.

Crude – Too early to say.

CL crude is sitting on the year to date VWAP, having just broken down and out of the neckline of the double top we have been looking at.

The double top has asked that all future paperwork be filed under a different name.

Will it mutate into a differently named pattern and bugger things up? Too early to say.

That said, for this to continue as it is, I’d like to see price hold below the $88 to $90 level.

We could well see prices push towards the double top’s current projected target at the $73.18 level.

Bitcoin – Bearish below 73,250.

Every chart has a switch marked BEAR. Someone always touches it.

Bitcoin flicked the bear switch for me, bearish below 73,250 with a channel breakout target at the 69,500 level, and a larger target behind that as we have broken back into the larger range we have seen play out for most of this year.

A move to 65,000 could be seen, as there is little to no support to stop a move lower.

Premium Poppers and Wall of Wins – A little tricky.

Yesterday’s Premium Poppers were a little tricky, but the community pulled the premium in despite the day on SPX and RUT (RUT chart not shown).

Richard H.: “Took the Bear range breakout using SS7505 on SPX at 1:30 pm (UK) off the ES1! range breakout for $2.75cr and had to sit through the regular hours ORB20 bull, but kept the faith and bought the transformer butterfly for $1 at 17:40 (UK). First Global Hours ES1! trade for me. A bit hairy, but came good.”

Duncan G.: “Spx pp transformed. Rut still waiting! Close above 2820 for full win 2818 for BE”

Duncan G.: “Rut transformed and both rut and spx landed in the tent of plenty! A bad day became my best for some weeks. Trust the system!”

James D.: “Took the SPX and RUT BO1 bull moves on PP and then panicked, so took the SPX LP bear, and somehow came out in profit Lucky”

Tue 10th Nov, another $500 x 2 would have hit the account.

Meme of the Day:

Trade well,

T2 Markets

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