A few days ago we wrote a piece called the Point of No Return.
That inflection point is the 5250/5150 region.
This ties to a Bottoms Line connecting the October 2023 low with the early August low(green) as well as a Bottoms Line from the April 2024 low (black).
In addition, typically prior resistance becomes new support. The prior resistance was the March high at 5200-5250.
The Flash Crash violated the March highs but the breakage was short-lived. One day.
Another drive below the March highs and the Second Mouse will get the cheese.
As I like to say, the first mouse (the first signal) gets the squeeze, the second mouse (the second signal) gets the cheese.
Breakage below this 5250-5150 band confirms a big double top in the SPX.
The idea that late August installed a Secondary High, a double top is two-fold:
- The August high backtests a Ghost Line from the October/April lows.
- August is the anniversary of several historic turns”
The late August 2000 Secondary High
The 1929 pre-crash top
The 1987 pre-crash top
The low in 1921 that started the Roaring Twenties Bull Run.
The low in 1982 that started a super bull.
It was a Turnaround Turnaround Tuesday.
The SPX made an opening high as expected and dropped sharply.
Then we got another turnaround that saw a drive back to test the morning high.
In sum the SPX turned its dailies up for the first time this month.
Trade above Tuesday’s high today puts the index in the daily Minus One/Plus Two Sell position on a backtest of its 50 day line.
If the trend has turned down, if we get a pop on the CPI it should be a rally to sell.