SPX has seen a decent retracement from the highs, the reversion to the mean target at the 45dma has been hit, and a lot of decent looking bull flags have been forming on US indices. SPX may now be close to a retracement low, and a daily RSI 5 buy signal fixed a couple of days ago. The overall setup here is strongly suggesting that the next move on SPX may be a retest of the 2023 high at 4607.07.
SPX daily chart:
On ES there are a couple of options for a bull flag here, the first is a falling wedge, with the support trendline currently in the 4437.50 area, but that doesn’t need to be hit, as the next obvious target within the wedge would be wedge resistance, currently in the 4504 area. The second option is a falling channel with support currently in the 4412 area, though that channel has no direct match on SPX.
ES Sep 60min chart:
On SPX the obvious flag pattern is a falling wedge with support about five handles lower than the currently day’s low in the 4420 area. On ES that would be in the 4436/7 area.
SPX 15min charts:
On NDX the obvious flag pattern is a high quality falling megaphone, with the low retest today setting up a very nice looking double bottom setup.
NDX 15min chart:
On IWM the flag setup looks like a falling wedge that is underthrowing bullishly at the moment.
IWM 15min chart:
On Dow the flag looks like a falling channel or megaphone and Dow has been the strongest index during the retracement.
INDU 15min chart:
Bigger picture I’m leaning towards a short term low in the next day or two, and then at minimum a strong rally over the rest of August that may well retest the 2023 high on SPX, Dow and perhaps also NDX and IWM. After that there may be a larger retracement into late September or early October, but after the retracements are done, on the even bigger picture I have open bull flag targets at retests of the all time highs on SPX and NDX, and I’d be looking for a move into those targets.
If you are enjoying my analysis and would like to see it every day at theartofchart.net, which I co-founded in 2015, you can register for a 30 day free trial here. It is included in the Daily Video Service, which in turn is included in the Triple Play Service.